§ 72 — Liability of persons continuing the business in certain cases

New York § 72

• Jurisdiction: New York
• Law PTR: Partnership
• Art. 6: Dissolution and Winding Up

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§ 72. Liability of persons continuing the business in certain cases.\n1. When any new partner is admitted into an existing partnership, or\nwhen any partner retires and assigns (or the representative of the\ndeceased partner assigns) his rights in partnership property to two or\nmore of the partners, or to one or more of the partners and one or more\nthird persons, if the business is continued without liquidation of the\npartnership affairs, creditors of the first or dissolved partnership are\nalso creditors of the partnership so continuing the business.\n 2. When all but one partner retire and assign (or the representative\nof a deceased partner assigns) their rights in partnership property to\nthe remaining partner, who continues the business without liquidation of\npartnership affairs, either alone or with others, creditors of the\ndissolved partnership are also creditors of the person or partnership so\ncontinuing the business.\n 3. When any partner retires or dies and the business of the dissolved\npartnership is continued as set forth in subdivisions one and two of\nthis section, with the consent of the retired partners or the\nrepresentative of the deceased partner, but without any assignment of\nhis right in partnership property, rights of creditors of the dissolved\npartnership and of the creditors of the person or partnership continuing\nthe business shall be as if such assignment had been made.\n 4. When all the partners or their representatives assign their rights\nin partnership property to one or more third persons who promise to pay\nthe debts and who continue the business of the dissolved partnership,\ncreditors of the dissolved partnership are also creditors of the person\nor partnership continuing the business.\n 5. When any partner wrongfully causes a dissolution and the remaining\npartners continue the business under the provisions of section\nsixty-nine, paragraph (b) of subdivision two, either alone or with\nothers, and without liquidation of the partnership affairs, creditors of\nthe dissolved partnership are also creditors of the person or\npartnership continuing the business.\n 6. When a partner is expelled and the remaining partners continue the\nbusiness either alone or with others, without liquidation of the\npartnership affairs, creditors of the dissolved partnership are also\ncreditors of the person or partnership continuing the business.\n 7. The liability of a third person becoming a partner in the\npartnership continuing the business under this section to the creditors\nof the dissolved partnership shall be satisfied out of partnership\nproperty only.\n 8. When the business of a partnership after dissolution is continued\nunder any conditions set forth in this section the creditors of the\ndissolved partnership, as against the separate creditors of the retiring\nor deceased partner or the representative of the deceased partner, have\na prior right to any claim of the retired partner or the representative\nof the deceased partner against the person or partnership continuing the\nbusiness, on account of the retired or deceased partner's interest in\nthe dissolved partnership or on account of any consideration promised\nfor such interest or for his right in partnership property.\n 9. Nothing in this section shall be held to modify any right of\ncreditors to set aside any assignment on the ground of fraud.\n 10. The use by the person or partnership continuing the business of\nthe partnership name, or the name of a deceased partner as part thereof,\nshall not of itself make the individual property of the deceased partner\nliable for any debts contracted by such person or partnership.\n