A limited partnership must have at least one limited partner and one general partner. Limited partners do not usually participate in the management of the partnership and are only liable for the partnership's debts equal to their investments in the partnership. General partners typically run the limited partnership and have unlimited liability. There are several steps the partners must take to dissolve a limited partnership.
Limited Partnership Formation
Limited partnerships are formed and dissolved in New York under state partnership law. When forming the business, New York requires that a limited partnership file a certificate of limited partnership with the New York Department of State, Division of Corporations. The certificate includes the names and addresses of the general partners. One of the reasons for filing the certificate is to create a public record of which partners have unlimited liability.
State law provides that partners in a limited partnership may dissolve the limited partnership in accordance with dissolution provisions provided in the partnership agreement, which might specify a certain time or event triggering dissolution. If not otherwise specified in the agreement, a majority of the partners may agree to close the business. Additionally, the limited partnership may dissolve when one general partner leaves the business, unless the agreement provides otherwise, or when the limited partnership no longer has limited partners. Furthermore, a partner may request that the court dissolve the business whenever it is not reasonably practicable to carry on the business.
Winding Up Affairs
Following the decision to close the business, the general partners wind up the affairs of the business. Partners cancel licenses and permits for the business, as well as inform all business partners, clients and customers of its dissolution. Partners address all debts of the business, submit final tax returns, and pay final paychecks to employees. If assets are still available after debts are paid, the limited partnership may distribute the remaining assets of the business to partners in proportion to their ownership interests, or as provided in the partnership agreement.
Certificate of Cancellation
After the partners decide to dissolve the business and proceed to wind up the affairs of the limited partnership, the business has 90 days to file a certificate of cancellation with the New York Department of State, Division of Corporations. On the certificate, the business indicates the name of the limited partnership, date of dissolution and reason for closing the business. All general partners must sign the certificate of cancellation and pay a filing fee. If the limited partnership used an assumed name, the business also files a certificate of discontinuance of assumed name with the New York Department of State, Division of Corporations.