Question

Fancher organized a limited partnership and is the only general partner. Carley invested $16,900 in the partnership and was admitted as a limited partner with the understanding that she would receive 6% of the profits. After two unprofitable years, the partnership ceased doing business. At that point, partnership liabilities were $80,500 larger than partnership assets. How much money can the partnership's creditors obtain from Carley’s personal assets to satisfy the unpaid partnership debts?

Answer 1

The main advantage of a being a limited partner is that the liability of a limited partner is limited to the extent of capital contributed, in other words, in case of bankruptcy a limited partner will have to give up his/her share of capital invested. No claims in limited partner's personal assets can be made for recovery. The risk is limited.

In the given case, the creditors cannot obtain anything from Carley's personal assets because Carley was a limited partner in the said partnership firm.