Death and Conversion of a General Partner

Death and Conversion of a General Partner

      A recent decision from California addresses two changes with respect to general partners in limited partnerships. One of those situations was the death of a natural person, and the other was the conversion of the corporation into an LLC. Wong v. California Forefront, Inc., B281939, 2018 WL 4404148 (Ca. Ct. App. Second Dist. Sept. 17, 2018).

       Lily Wong was one of the two original general partners in Park Center Partnership. The other original general partner was California Forefront, Inc. An individual, Wyman Ip was the only limited partner. When Lily Wong died, her husband, as trustee of the Lily Y. Wong Family Trust, asserted that he was the successor general partner. In the alternative, it was asserted that when CFI, in 2010, converted from a corporation to a limited liability company, it was in effect disassociated as a general partner. Both of these assertions were rejected.

      While it was acknowledged that, upon the death of Lily Wong, her trust became the assignee of her economic interest in the partnership, applying the terms of this particular limited partnership agreement, which imposed specific limitations upon affiliates of existing partners, it was found that the trust could not be a successor general partner.

      With respect to the conversion of CFI from a corporation into a LLC, the court cited the applicable provision of the statute, it providing that upon conversion the converted entity is “the same entity that existed before the conversion.” That being the case, it was held that the conversion of a corporate general partner into the form of an LLC did not effect that corporation’s disassociation from the limited partnership or the alteration of its status as a general partner.