Common use of Distribution of Liquidation Proceeds Clause in Contracts

Distribution of Liquidation Proceeds. The Partners shall continue to allocate Net Profits and Net Losses and distribute Available Cash during the winding-up period in the same manner and the same priorities as provided for in Articles 4 and 5 hereof. The proceeds from the liquidation of Partnership Property shall be applied in the following order: 11.2.1 to the payment of creditors, in the order of priority as provided by law, except to Partners on account of any Partnership Loan, and to the establishment of such reserves that Managing Partner may reasonably deem necessary, appropriate or desirable for any contingent, conditional, or unmatured liabilities, debts or obligations of the Partnership arising out of or in connection with the Partnership operations; and 11.2.2 to the Partners in accordance with Section 5.2. Where the distribution pursuant to this Section 11.2 consists both of cash (or cash equivalents) and non-cash assets, the cash (or cash equivalents) shall first be distributed, in a descending order, to fully satisfy each category starting with the most preferred category above. In the case of non-cash assets, the distribution values are to be based on the fair market value thereof as determined in good faith by the liquidator, and the shortest maturity portion of such non-cash assets (e.g., notes or other indebtedness) shall, to the extent such non-cash assets are readily divisible, be distributed, in a descending order, to fully satisfy each category above, starting with the most preferred category.