Q: I am separating from a business partnership and want to know if I am liable for business debt.
A: If it is a general partnership, and not a limited liability company or corporation, then all partners are equally and personally liable for the debts of the partnership, subject to any partnership agreement or withdrawal agreement between the partners as to indemnification or contribution toward the liabilities (but such and agreement does not bind the creditors to the partnership, who may still sue all partners). If your withdrawal from the partnership is clearly established by formal action or agreement, then you would be protected from new liability incurred by the partnership after the date of withdrawal, but not before. If an LLC or corporation, then absent some extreme scenario whereby the company or corporate veil could be pierced in a court action, departing owners or shareholders liability will be governed by any agreement among the owners and shareholders as may be in place, as well as to the extent that the departing owner or shareholder signed personally on the debt, but otherwise the departing owner or shareholder would be protected from suits or claims of creditors of the LLC or corporation. You should look to the terms of any partnership agreement if a partnership, or to the terms of any operating agreement or shareholders agreement if you are departing an LLC or corporation.
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