What is a Liquidation Agreement?
A Liquidation Agreement is an agreement between two or more partners to end a business partnership. By entering into this agreement, you will not immediately terminate the partnership, but instead the partnership will continue until the "winding up" of the business is concluded. "Winding up" is the process of paying off all debts of the business, distributing the remaining assets among the partners, and terminating the partnership's legal existence. If the original partnership agreement doesn't outline the terms of liquidation, a Liquidation Agreement may help to prevent disputes about the partners' entitlements and responsibilities.
When to use a Liquidation Agreement:
- You want to end a business partnership.
- One of your partners wants out of the business.
- You manage a company that has joint business owners.
This (the "Dissolution Agreement") is made on between the following Partners:
, , ,
The parties to this Agreement shall be collectively referred to as "Partners."
1. Description of Partnership
is a partnership with a business address of , , . The Partners have continued , which is engaged in .
2. Partnership Agreement
The Partners entered into the Partnership and have continued in partnership under the provisions of a written agreement dated (Partnership Agreement), a copy of which is attached herewith as Exhibit A and incorporated by reference into this Agreement.
3. Intention to Dissolve
The Partners now intend to dissolve the Partnership and liquidate its affairs pursuant to a plan by which the Partners sell all of the assets of the Partnership and distribute to the Partners any proceeds remaining after the payment of all liabilities of the Partnership.
1. Effective Date of Dissolution
The Partners agree to dissolve their Partnership, effective at the close of business on , and shall thereafter promptly liquidate and wind-up the affairs of the Partnership.
2. Termination of Business
Except for the purpose of carrying out the winding-up and liquidation of the business of the Partnership, no Partner shall transact any further business nor incur any further obligations on behalf of the Partnership after the date of this Agreement.
3. Statement of Dissolution
The Partners agree to file a statement of dissolution in the office of the Division of Revenue in the Department of the Treasury and to have the statement recorded in the office of the county recording officer in those counties in all other states where the Partnership business has been regularly conducted.
4. Notice of Dissolution
The Partners agree to cause a notice of the dissolution to be published at least once in a newspaper of general circulation in all counties in the where the Partnership business has been regularly conducted.
Immediately following the dissolution of the Partnership, the Partners shall cause an accounting to be made by of all of the assets, liabilities, and net worth of the Partnership as of the effective date of the dissolution.
Except as disclosed in the books and records of the Partnership, each of the Partners represents and warrants that no Partner has previously contracted any liability that can or may be charged to the Partnership or any other Partner, nor has any Partner received or discharged any of the credits, moneys, or effects of the Partnership.
3. Settling Accounts
On completion of the accounting, the Partners shall pay all of the liabilities of the Partnership, including those owing to the Partners other than for capital or profits, in accordance with the Revised Uniform Partnership Act. All amounts remaining after payment of the above liabilities shall be distributed as follows:
4. Appointment of Liquidating Partner
is appointed as the liquidating Partner to carry out the terms and conditions of this Agreement.
5. Inspection of Books and Records
All other Partners shall have the right, directly or through his or her representative, at all reasonable times, to examine the books and pertinent records of the Partnership to establish and enforce his or her rights under this Agreement.
1. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the .
2. Other Instruments
The Partners covenant and agree that they will execute any other instruments and documents that are or may become necessary or convenient to carry out this Agreement.
The headings used in this Agreement are used for administrative purposes only and are not to be considered in construing the terms of this Agreement.
4. Parties Bound
This Agreement shall be binding on, and inure to the benefit of, the Partners and their respective heirs, executors, administrators, legal representatives, successors, and permitted assigns.
5. Strict Construction
This Agreement shall not be strictly construed against either Partner.
If any provision in this Agreement shall for any reason be held invalid, illegal, or unenforceable in any respect, that invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and this Agreement shall be construed as if the invalid, illegal, or unenforceable provision had never been contained in this Agreement.
This Agreement may be executed in any number of counterparts and each of the counterparts shall for all purposes be deemed to be an original.
8. Prior Agreements Superseded
This Agreement supersedes any prior understandings or written or oral agreements between the Partners respecting the subject matter of this Agreement, including the Partnership Agreement, to the extent that the understanding or agreement conflicts with any provision contained in this Agreement.
9. Survival of Representations and Warranties
The representations and warranties set forth in this Agreement shall be continuous and shall survive the taking of any accounting and the dissolution and winding-up of the Partnership as contemplated by this Agreement.
Executed by the Partners of with the intent of being legally bound.
THE PARTNERS OF :
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|_____||Look over the to ensure it matches your intentions. If you'd like to make changes, you can download this document in Microsoft Word, or you can make edits using the Document Manager on Rocketlawyer.com.|
|_____||You can use Rocket Lawyer's e-signature service to electronically have each party sign the document. Or, have the parties sign and date duplicate hard copies of the .|
|_____||Share or deliver a copy of the Agreement to the other Party.|
|_____||Keep a copy of all documents for your own records and in case there is a problem.|
|_____||Each Party should receive an original signed copy of the Agreement. Your copy should be kept in a safe place. If you signed a paper copy of your document, you can use Rocket Lawyer to store and share it. Safe and secure in your Rocket Lawyer File Manager, you can access it any time from any computer, as well as share it for future reference.|
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