Remember tailoring experts Frieda Oglesby, Rena Fitts, and Will Bertrand, who decided to go into business...

Remember tailoring experts Frieda Oglesby, Rena Fitts, and Will Bertrand, who decided to go into business together? Their business, FitzWellby, is one that provides in-home measuring and fittings, and even on-site stitching, for busy executives who don't have time to take their clothing to tailor shops. The business was formed as a general partnership. Bob Strahan joined the partnership as a fourth general partner only one day before Bertrand inadvertently left a client's home unlocked while dropping off a garment; client Veronica Treadwell's home was subsequently robbed.

Treadwell prevails in the lawsuit she filed against FitzWellby; the three original individual partners are also deemed to be individually liable. Faced with the financial realities of this catastrophe, Oglesby, Fitts, Bertrand, and Strahan decide to dissolve the business.

• What would have been the outcome of the Treadwell lawsuit for Oglesby and Fitts if FitzWellby had been a limited partnership, with Bertrand as the general partner?

• What would be the distribution of the assets of FitzWellby, the general partnership?

How, if at all, would the distribution of assets be different if FitzWellby had been a limited partnership?

Expert Solution

1. If FitzWellby had limited partnership with Bertrand being the general partner, the limited partners of business will Oglesby, Fitts and Strahan. The limited partners will have limited liability of the business while the general partner having the unlimited liability of business. In such a scenario, the limited partners will not have any liability in Treadwell’s theft case while the general partner, Bertrand, will be held responsible for the theft and will be required to pay the penalties.

2. If FitzWellby was a general partnership, the dissolution of assets will be based on the part of investment made by each partner. The ratio of investment of each partner will be taken into consideration and the assets of the business will be divided in the same ratio. If the investment has been done in equal parts, the assets will be divided equally among the partners.

In case of limited partnership, the limited partners will get asset with respect to the initial investment which they made. The general partner will have more stakes in the asset distribution of business.

keosha answered 4 months ago

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