29-334. Distribution on withdrawal

A. On the withdrawal of a limited partner, except as otherwise provided in writing in the partnership agreement, the withdrawn limited partner and his personal representatives, successors and assigns do not have the right to receive any distribution by reason of withdrawal, but have only the rights of an assignee of the withdrawn limited partner's interest in the partnership to receive distributions with respect to the limited partner's interest during any continuation and during and on completion of any winding up of the limited partnership, less any damages recoverable against the withdrawn partner if the withdrawal violated the provisions of the partnership agreement.

B. If a general partner withdraws and within ninety days thereafter the limited partnership dissolves and commences to wind up its business, except as otherwise provided in a partnership agreement, the withdrawn general partner and the partner's personal representatives, successors and assigns do not have the right to receive any distribution by reason of the withdrawal but only have the rights of an assignee of the withdrawn general partner's interest in the limited partnership to receive distributions with respect to the general partner's interest during any continuation of the business of the partnership and during and on completion of winding up. If the event of withdrawal violated the partnership agreement, any damages recoverable from the withdrawn general partner shall be subtracted from this distribution.

C. If a general partner withdraws and within ninety days thereafter the limited partnership has not dissolved and commenced winding up of the partnership business, except as otherwise provided in writing in the partnership agreement, the partnership shall cause the withdrawn general partner's interest, if any, in the partnership to be purchased for a buyout price equal to the amount that would have been distributable to the withdrawn general partner under section 29-1077, subsection B if, on the date of withdrawal, the assets of the partnership were sold at a price equal to the greater of the liquidation value or the value based on a sale of the entire business as a going concern without the continuing services of any of the partners and the partnership was wound up as of that date, with interest payable from the date of withdrawal to the date of payment. Except as may be provided in writing in the partnership agreement, payment of this buyout price is subject to the following terms:

1. Damages for wrongful withdrawal and all other amounts owing, whether or not presently due, from the withdrawn general partner to the partnership shall be offset against the buyout price. Interest on these damages shall be paid from the date the amount owed becomes due to the date of payment.

2. A partnership shall indemnify a withdrawn general partner whose interest is being purchased against all partnership liabilities, whether incurred before or after the withdrawal, except:

(a) Liabilities incurred by an act of the withdrawn general partner under section 29-1062.

(b) Liabilities for which the partner was not liable pursuant to section 29-215 or 29-1026.

3. If no agreement for the purchase of a withdrawn general partner's interest is reached within one hundred twenty days after a written demand for payment, the partnership shall pay, or cause to be paid, in cash to the withdrawn general partner the amount, if any, the partnership estimates to be the buyout price and accrued interest, reduced by any offsets and accrued interest under paragraph 1.

4. If a deferred payment is authorized under paragraph 6, the partnership may tender, in lieu of payment under paragraph 3, a written offer to pay the amount it estimates to be the buyout price and accrued interest, reduced by any offsets under paragraph 1, stating the terms of payment, the amount and type of security for payment and the other terms and conditions of the obligation.

5. The payment or tender required by paragraph 3 or 4 shall be accompanied by the following:

(a) A written statement of partnership assets and liabilities as of the date of withdrawal.

(b) The latest available partnership balance sheet and income statement, if any.

(c) A written explanation of how the estimated amount of payment was calculated.

(d) Written notice that the payment is in full satisfaction of the obligation to purchase unless within one hundred twenty days after the written notice the withdrawn general partner commences an action to determine the buyout price, any offsets under paragraph 1 or other terms of the obligation to purchase.

6. A general partner who wrongfully withdraws before the expiration of a definite term or the completion of a particular undertaking is not entitled to payment of any portion of the buyout price until the expiration of the term or completion of the undertaking, unless the partner establishes to the satisfaction of the court that earlier payment will not cause material hardship to the business of the partnership. A deferred payment shall bear interest and shall be adequately secured by partnership assets if and to the extent reasonably practicable.

7. A withdrawn general partner may maintain an action against the partnership, pursuant to section 29-1035, subsection B, paragraph 2, subdivision (b), to determine the buyout price of that partner's interest, any offsets under paragraph 1 or other terms of the obligation to purchase. The action shall be commenced within one hundred twenty days after the partnership tenders payment or an offer to pay or within one year after written demand for payment if no payment or offer to pay is tendered. The court shall determine the buyout price of the withdrawn general partner's interest, any offset due under paragraph 1 and accrued interest and shall enter a judgment for any additional payment or refund. If deferred payment is authorized under paragraph 4, the court shall also determine the security for payment and other terms of the obligation to purchase. The court may assess reasonable attorney fees and the fees and expenses of appraisers or other experts for a party to the action, in amounts the court finds equitable, against a party that the court finds acted arbitrarily, vexatiously or not in good faith. The finding may be based on the partnership's failure to tender payment or an offer to pay in compliance with paragraph 3 or 4.