Jersey City, NJ asked in Business Law and Banking for New Jersey

Q: LLP took out SBA EIDL loan. Loan docs mention personal liability. One partner leaving does this effect buyout.

Partner buying out leaving partner wants to reduce buyout amount by leaving partners % of sba loan liability. Is this right? Nothing in partnership agreement and buyout terms mentions liabilities.

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T. Augustus Claus
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A: When a partner leaves an LLP that has taken out an SBA EIDL loan, the implications for the remaining partners can be influenced by several factors, including the terms of the partnership agreement and the loan documents. If the partnership agreement does not explicitly address the allocation of SBA EIDL loan liability in the context of a partner buyout, there may be room for negotiation between the departing partner and the remaining partners. However, it's crucial for all parties to seek legal counsel to ensure that any negotiated terms are legally sound and compliant with relevant laws and regulations. Additionally, the specific provisions of the SBA EIDL loan, which may include personal liability clauses, should be carefully reviewed to understand the extent of each partner's responsibility.

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