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Cindy, a 20% general partner in the CDE Partnership, wants to retire and has approached the other partners about having the partnership buy her out. The partnership is a cash basis, service-oriented partnership in which Cindy is an active partner. The partnership's assets consist primarily of unrealized receivables and cash. The partnership also
has substantial going concern value goodwill) which is probably its most valuable asset. Goodwill payments are not currently provided for in the partnership agreement, but the partnership agreement can be amended to include goodwill payments if that is advantageous. The other partners in the partnership are also active in the business and are not related to Cindy.
Discuss from Cindy's viewpoint how you would structure the liquidation of her interest under § 736. Answer as if you are her advocate. Do you think the other partners will agree with this structure? If not, what structure would they prefer?
Premium
In finance, this term refers to the amount by which the price of a bond or stock exceeds its principal or face value, or to an additional payment above the normal cost.
Time
A continuous sequence of events that occurs in an irreversible succession from the past, through the present, to the future.
Debt-to-Equity Ratio
A measure of a company's financial leverage, calculated by dividing its total liabilities by stockholders' equity.
Capital
Financial assets or the financial value of assets, such as cash and goods, used to fund a company's operations and growth.
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