Legal Question in Business Law in California

Re: Personal bankruptcy and partnership

Yes. Your assets, including your share of the partnership, become the property of the bankruptcy Trustee, to be sold to pay your creditors.

Re: Personal bankruptcy and partnership

As a matter of law. a partner's bankruptcy causes that partner to become "dissociated" from the partnership; see Corporations Code subsection 16601(6)(A). It does not dissolve the partnership; that happens when one of the items listed in Corporations Code section 16801 occurs.

This is a relatively recent concept in partnership law, introduced in California by the Revised Uniform Partnership Act of 1994. Previously, withdrawal of a partner caused dissolution of the partnership, which created unnecessary headaches.

The remaining partners, after a dissociation, can either terminate the partnership or continue it. If they choose to continue, they must buy out the dissociated partner. See Corporations Code section 16701.

I have never found an answer to whether there can be a one-person partnership, e.g., when one of two partners dissociates. The law says the partnership doesn't dissolve if the remaining partners decide to continue its business, but if there is only one remaining, doesn't it become a sole proprietorship? After some research, I have not found an answer as to whether a partnership can exist at and after the point where there is only one remaining partner. The RUPA implies, but does not expressly say, that it continues; but logic would dictate otherwise. I will continue to research this question but I'm not sure it has any practical import.