Question

According to the Uniform Partnership Act, unpaid creditors of an insolvent partner of a liquidating general partnership have access to assets of the partnership:

A) On the same basis as creditors of the partnership
B) After partnership creditors have been paid in full, but only to the extent of the insolvent partner's equity in the partnership
C) After partnership creditors and loans payable to partners have been paid in full
D) Under no circumstances

Answer 1

The unpaid creditors of an insolvent partner have the right to claim the insolvent partner's equity in the partnership after all partnership creditors have been satisfied.

Step-by-step explanation:

According to the Uniform Partnership Act, unpaid creditors of an insolvent partner of a liquidating general partnership have access to assets of the partnership after partnership creditors have been paid in full, but only to the extent of the insolvent partner's equity in the partnership. This is essentially stating that the personal creditors of an individual partner can seek repayment from that partner's share of the partnership assets once the partnership's debts have been satisfied. This is a significant aspect of a general partnership, where each partner has personal liability for the business's debts, and the partnership itself does not enjoy the protections of entities with limited liability.