Dear sir There are 4 partners of registered partnership firm xyz and Co. the existing partners will retire completely and new 3 partners will come in through a registered partnership deed. The existing partners have nullified all the creditors of the partnership firm in the balance sheet and have also written in stamp paper that any liabilities arising out of undisclosed transactions if any they will be liable and not the firm nor the new incoming partners. The firm has a fixed asset land, building , machinery in its name which after reconstitution will continue to be the property of the firm. Now the question is this if after the new partners comes in and Then some other person Mr. ABC to whom the old partners have given a promissory note and taken money from him in the name of the firm but not disclosed the amount as loan from Mr ABC. Can this person file a suit for attachment of physical fixed assets of the firm for getting back the money which he had lent to the firm ? Even though the outgoing partners have written in stamp paper that they will be responsible and later refuse to pay the amount saying that it is the loan given to the firm and not to them and they are not responsible. Can MR ABC get back the money from the firm or the old retired partners. We actually want to buy land building and machinery belonging to a firm. The seller says that he will pay of all the creditors and make the balance sheet zero and then we can enter and they exit. They are also willing to write in stamp paper and give as stated above. We are looking at reconstitution of firm because the municipal valuation is very high when compared to the original deal size. Pls advice if any other person to whom the outgoing partners have given promissory note and taken moneys or taken debt in any other form and have not zeroed the same. Will the liability come on the firm or the outgoing partners only?
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The retired partner,continues to be liable for acts of the firm done before such retirement of a partner.
2) This liability holds good unless there is an agreement between him, the concerned third party, and partners of the reconstituted firm
3) the new partner has no liability for any actions of the firm done before his admission.
3) ABC can get money from
retired partners
See some how the liability can come though if firm took any loan same should be in the balance sheet if it is not there then the old partners can be made liable for same.
See a detailed indemnity bond can be made including all the conditions and it can be signed and notarised wherein the old partners can agree that if any loan, promissory note cheque other then shown arise then they shall be personally liable not the firm and they will pay the same along cost of the litigation.
The partners of the existing firms are liable for any transection on behalf of the firm personnaly even if they have not provided written indemnity in this regard.
if the form is desolved and transferred all its assets to a new firm the new partnership firm will not at all be responsible for any liability as the new firm has taken over the assets only after payment of the agreed consideration.
Even if he files a suit you can serve a legal notice to the earlier partners and make them pay the same. You can file a written statement in court and annex the said stamp paper in court.
Dear Sir,
Get your MOU registered stating that it is the responsibilities of outgoing partners to satisfy all the creditors. Get issue a paper publication and in re structure partnership deed a clause may be introudced as stated by outgoing partners and their signature may be taken on the re structure partnership deed either as consenting witnesses or witnesses.
Dear Client,
If assets belonging to the firm is in the name of firm and acquired from profit of firm than any recovery shall be from firm assets and every partner is liable jointly with all the other partners and also severally, for all acts of the firm done while he is a partner.
Liability will come on firm`s assets and retiring partners jointly.
Hello,
Yes Mr. ABC can sue the firm and later in the suit you will ask the court to make the earlier partner a party to the suit. However, what you can do is in public interest make a publication in the newspaper that any creditor (Mr. ABC) may kindly inform about any claim within 15 days, failing which the form will not be liable in future.
You may post this on your website and also in two leading newspapers.
Regards
Mr. ABC can file a suit against the firm if he has lent the money in the name of the firm, however since the outgoing partners have undertaken the liability to clear such outstanding loans as their liability, the firm may give a notice to the partners to settle the amount in favor of the lender invoking the said undertaking.
You may wait for the formalities to be completed in this respect by the company and then when you find it absolutely free from all such liabilities, you may proceed with the purchase after obtaining a proper legal opinion in this regard.
The outgoing partners have given an undertaking to clear all the debts that may emerge after their retirement pertaining to their tenure in the firm, hence the firm cannot be held liable for any such claim in future.
A firm is not a separate legal entity
It does not have a juristic personality
A firm always acts through its partners
So the assets belonging to the firm will have to be conveyed by existing partners to you by registering a proper transfer deed
Just by reconstituting the firm, you will not get a proper title to the property
Also the reconstitution will technically dissolve the firm as all existing partners will be retiring at same time
The existing partners have to clear the outstanding loans of ABC. ABC moving against the firm is essentially moving against its partners, which would be you. That's not safe
Take undertaking letter from existing partners and all their previous issues settled and not bind you any further proceedings after that date.
