The Ability of the Estate of a Deceased Limited Partner to Maintain A Derivative Action

The Ability of the Estate of a Deceased Limited Partner to Maintain A Derivative Action

      Peter Mahler, in his blog New York Business Divorce, on February 10 posted a piece reviewing a recent New York decision on a derivative action brought by a limited partner. After the action was initiated, that limited partner died. Which brought to the fore the question: can the estate of a limited partner, which itself is not a limited partner but rather an assignee, continue to prosecute a derivative action that, ab initio, must be brought and maintained by a limited partner? Particularly, this decision would turn upon a provision of the New York Limited Partnership Act that provides that the legal representative of the deceased partner may exercise the decedent’s rights “for the purpose of settling his or her estate or administering his or her property.” 

      In this instance, and in reliance upon prior law, it was held that substitution of the estate with the capacity to continue the derivative action would be denied.

      The title of Peter’s posting is Death of Limited Partner Disarms Derivative Action; HERE IS A LINK to that post.