Policemen’s Annuity and Benefit Fund of Chicago v. DV Realty Advisors LLC, C.A. No. 7204-VCN (Del. Ch. Nov. 27, 2013)
Issue Addressed: Whether the removal of the general partner converts that interest into a limited partnership interest or a “mere economic interest.”
The court observed that pursuant to the Delaware Revised Uniform Limited Partnership Act (“DRULPA”), unless the partnership agreement provides otherwise, a person may be admitted to the partnership as a limited partner only upon the consent of all the limited partners. See Section 17-301(b)(1) of the DRULPA. In this case none of the existing limited partners consented to the removed general partner becoming a limited partner, and there is no statutory authority for that status nor did the limited partnership agreement support that new status.
Because the court concluded that the former general partner did not become a limited partner, it was not necessary for the court to address the issue of whether or not it retained a “economic interest.” The agreement provided a mechanism for the return of its capital which the court also addressed in connection with an issue of the value of that capital and when it was required to be returned.
For a more complete description of the background and procedural facts of this case, refer to prior Delaware decisions in this matter highlighted on these pages.