Case Problem Analysis: Winding Up

Dwayne Short, Serkan Gonzaga, and Danny Baker formed a general partnership named "Relo Now," which was a trucking business in Texas. The partners agreed to share equally one$-$third of the profits and losses of the partnership. Short was the only partner working in the office. In order to conduct partnership business, Short entered into an office equipment lease agreement with IKON Capital Corporation $($IKON$)$ for a telephone system, fax machine and photocopier for $$577\mathrm{.}91$ a month. Soon thereafter, the company for which the partnership was acting as a representative had changed its system, thereby preventing the partnership from being capable of operating its business. Short was unable to pay IKON the lease payment, among other debts.

IKON sued Short individually and d$/$b$/$a Relo Now $($d$/$b$/$a is an abbreviation for "doing business as$"),$ claiming a total exceeding $$16,000$ which included past due payments and accelerated future lease payments. Short negotiated a settlement with IKON for $$9,000.$ Short notified Gonzaga and Baker of the settlement agreement and said they were jointly and severally liable for the $$9,000$ that extinguished the partnership's debt to IKON, plus attorney's fees. Baker filed bankruptcy, and his debts were discharged in bankruptcy court. Gonzaga, however, refused to pay the debt. Gonzaga claimed he was not legally responsible to

Apply It: Winding Up

Total points: $--/5$

Attempts left: $3$

All partners in a partnership

select answer be held liable even if a particular partner did not participate in$,$ know about, or ratify the conduct that gave rise to a lawsuit against the partnership. A judgment against one partner severally select answer $q,$ extinguish the others' liability. Therefore, Short select answer $-$ recover the amount equal to Gonzaga's share of the debt to IKON.

In addition to debts and obligations, a partner select answer $$ receive reimbursement for expenses incurred in the process of winding up a partnership. Settling debts select answer a part of winding up a partnership. Short select answer $$ be able to recover Gonzaga's share of the

attorney's fees related to settling the IKON debt.