BLAW 308 Lecture Notes - Lecture 7: Secured Creditor, Capital Account, Novation
Document Summary
If the collateral is sold and less than what a secured creditor is owed, then they become a general creditor with the remaining amount. Then partners get what"s left, like in their capital accounts. If a partner is a creditor, then they have the same priority as a general creditor. If assets are less than what is owed, then each general partner is paid their proportion of what is owe (40/240, 150/240, 50/240), then personal partner assets. Each capital acc is for 100k, 25k capital from shares, 50k distribution, leave 75k in account, then you add more, so three people have 175k and one person has. 75k, then we decide to distribute 80k, leaves 3 95k accounts and one -5. Then you wind up, so the general partner with a negative account has to cover that negative. Capital call: putting more money into the company. For an llp or llc, you can only sue the entity, not the actual partners.
