Joe R Notified His Partners in Writing That He Would Be

question 50

Multiple Choice

Joe R. notified his partners in writing that he would be retiring from the business partnership at the end of 2015. It was acknowledged and agreed upon and, at year end, the remaining partners paid him for his interest in the partnership. In February of 2016, one of the remaining partners misapplied some trust funds that a long-time client had placed in the care of the partnership for the purchase of a hotel. The partnership was sued, but the assets of the partnership were not sufficient to satisfy the judgment. The successful plaintiff went against the personal assets of the partners, including those of Joe R. What is the likely outcome?

• A) Joe R. is not liable because he had retired from the partnership at year end and had properly notified his partners.
• B) Joe R. is not liable because he had had nothing whatsoever to do with the misapplication of the trust money.
• C) Joe R. is liable if he failed to give proper notice to outsiders, namely, the long-time client whose funds were misapplied.
• D) Joe R. is only liable for his share of the losses even if the other partners don't have the assets to pay.
• E) Joe R. is not liable since he was not a partner when the misapplication happened.

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Definitions:

Debtor Relief

Legal measures or frameworks aimed at providing assistance or relief to those who are unable to pay their debts.

1994 Amendments

Refers to specific modifications made to legislation or legal documents in the year 1994.

Chapter 11

A provision in the U.S. Bankruptcy Code that allows businesses and individuals to reorganize their debts in order to pay back creditors over time.

Trustee

A person or firm that holds and administers property or assets for the benefit of a third party under the terms of a trust agreement.