When an action is brought to dissolve a California limited partnership or a California limited liability company, the California Corporations Code allows the other partners or the other members to avoid the dissolution by purchasing, for cash, the interests owned by the party seeking dissolution.
Corp C § 15908.02(b) is the provision that applies to limited partnership); Corp C § 17707.03 (c)( l) is the provision that applies to limited liability companies. These provisions are referred to here as the statutory buy-out provisions.
In Boschetti v. Pacific Bay Investments Inc. (Mar. 7, 2019), the court of appeal held that the statutory buy-out provisions of California law cannot be used to avoid dissolution of limited liability companies or of liability partnerships formed under the laws of other states, even if the owners of such entities have substantial ties to California.
There is also a statutory buy-out provision in the Corporations Code that allows other shareholders of a California corporation to avoid dissolution sought by a shareholder, but that provision was not involved in the case. There is no statutory buy-out provision that applies to an action to dissolve a general partnership.
