DISTRIBUTION FOLLOWING LIQUIDATION Clause Samples
The 'Distribution Following Liquidation' clause defines how a company's remaining assets are allocated among stakeholders after the company has been dissolved and its assets liquidated. Typically, this clause outlines the order of priority for payments, such as settling outstanding debts, paying preferred shareholders, and then distributing any remaining assets to common shareholders. By establishing a clear hierarchy and process for asset distribution, this clause ensures fairness and reduces disputes among creditors and shareholders during the winding-up process.
DISTRIBUTION FOLLOWING LIQUIDATION. Upon the completion of winding up and liquidation of the Partnership pursuant to SECTION 15.2 above, the Liquidating Partner shall distribute the proceeds of the Partnership in the following order of priority:
(a) To the payment of all debts and liabilities of the Partnership other than:
(i) loans or advances that may have been made by any Partner to the Partnership; and
(ii) debts secured by liens on property sold pursuant to the liquidation subject thereto; provided that neither the Partnership nor any of the Partners is personally liable on, or is released from liability on, such debts;
(b) To the payment of all expenses of liquidation;
(c) To the setting up of any reserves which the Liquidating Partner may deem necessary for any contingent or unforeseen liabilities or obligations of the Partnership or of the Partners arising out of or in connection with the Partnership. Said reserves may be paid over by the Liquidating Partner to a bank or trust company acceptable to the Liquidating Partner to be held by it for the purpose of disbursing such reserves in payment of any of the aforementioned liabilities or obligations and, at the expiration of such period as the Liquidating Partner shall deem advisable, distributing the balance, if any, thereafter remaining, in the manner hereinafter provided;
(d) To the repayment of any loans that may have been made by the Partners to the Partnership, in accordance with the order of priority established in any applicable Debt Documents or, if no priority is established, then pro rata, in accordance with the amounts outstanding thereunder; and
(e) The balance, if any, to the Partners, in accordance with their respective positive Capital Accounts, after giving effect to Capital Account adjustments for the taxable year in which the Liquidating Event occurs (other than those from the liquidating distribution made pursuant to SECTION 15.3(e), but including all Capital Contributions made to restore a deficit Capital Account.)
DISTRIBUTION FOLLOWING LIQUIDATION. 17 ARTICLE XVII NO PARTNERSHIP OPPORTUNITY AND AFFILIATE TRANSACTIONS...................................18 17.1 Other Business; Partnership Opportunity.................................................................18 17.2 Affiliate Transactions..................................................................................19
DISTRIBUTION FOLLOWING LIQUIDATION. 13 ARTICLE XVI NO PARTNERSHIP OPPORTUNITY AND AFFILIATE TRANSACTIONS......................................14