N.Y. Partnership Law § 72: Liability of persons continuing the business in certain cases

§ 72. Liability of persons continuing the business in certain cases.

1. When any new partner is admitted into an existing partnership, or

when any partner retires and assigns (or the representative of the

deceased partner assigns) his rights in partnership property to two or

more of the partners, or to one or more of the partners and one or more

third persons, if the business is continued without liquidation of the

partnership affairs, creditors of the first or dissolved partnership are

also creditors of the partnership so continuing the business.

2. When all but one partner retire and assign (or the representative

of a deceased partner assigns) their rights in partnership property to

the remaining partner, who continues the business without liquidation of

partnership affairs, either alone or with others, creditors of the

dissolved partnership are also creditors of the person or partnership so

continuing the business.

3. When any partner retires or dies and the business of the dissolved

partnership is continued as set forth in subdivisions one and two of

this section, with the consent of the retired partners or the

representative of the deceased partner, but without any assignment of

his right in partnership property, rights of creditors of the dissolved

partnership and of the creditors of the person or partnership continuing

the business shall be as if such assignment had been made.

4. When all the partners or their representatives assign their rights

in partnership property to one or more third persons who promise to pay

the debts and who continue the business of the dissolved partnership,

creditors of the dissolved partnership are also creditors of the person

or partnership continuing the business.

5. When any partner wrongfully causes a dissolution and the remaining

partners continue the business under the provisions of section

sixty-nine, paragraph (b) of subdivision two, either alone or with

others, and without liquidation of the partnership affairs, creditors of

the dissolved partnership are also creditors of the person or

partnership continuing the business.

6. When a partner is expelled and the remaining partners continue the

business either alone or with others, without liquidation of the

partnership affairs, creditors of the dissolved partnership are also

creditors of the person or partnership continuing the business.

7. The liability of a third person becoming a partner in the

partnership continuing the business under this section to the creditors

of the dissolved partnership shall be satisfied out of partnership

property only.

8. When the business of a partnership after dissolution is continued

under any conditions set forth in this section the creditors of the

dissolved partnership, as against the separate creditors of the retiring

or deceased partner or the representative of the deceased partner, have

a prior right to any claim of the retired partner or the representative

of the deceased partner against the person or partnership continuing the

business, on account of the retired or deceased partner's interest in

the dissolved partnership or on account of any consideration promised

for such interest or for his right in partnership property.

9. Nothing in this section shall be held to modify any right of

creditors to set aside any assignment on the ground of fraud.

10. The use by the person or partnership continuing the business of

the partnership name, or the name of a deceased partner as part thereof,

shall not of itself make the individual property of the deceased partner

liable for any debts contracted by such person or partnership.