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22 June, 14:05

In winding up a limited partnership, non-partner creditors are paid before the partners receive their capital contributions.

A. True

B. False

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Answers (1)
  1. 22 June, 16:00
    0
    True

    Explanation:

    In a limited liability partnership, each partner's risk of losing personal assets is limited to the share capital / equity he has invested. However, before receiving their capital contributions (for say at the time of sale of business / winding up), the Company has to first pay the creditors. Creditors are people to whom the Company owe money. Hence, the Company, after paying its creditors, distribute the remaining amount of capital in the partners when winding up the business.
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