§ 7-12-51. Rules for distribution. In settling accounts between the partners after dissolution, the following rules are observed, subject to any agreement to the contrary:

(1) The assets of the partnership are:

(i) The partnership property;

(ii) The contributions of the partners specified in subdivision (4).

(2) The liabilities of the partnership rank in order of payment, as follows:

(i) Those owing to creditors other than partners;

(ii) Those owing to partners other than for capital and profits;

(iii) Those owing to partners in respect of capital;

(iv) Those owing to partners in respect of profits.

(3) The assets are applied in the order of their declaration in subdivision (1) to the satisfaction of the liabilities.

(4) Except as provided in § 7-12-26(b), the partners shall contribute, as provided by § 7-12-29(1), the amount necessary to satisfy the liabilities; but if any, but not all, of the partners are insolvent, or not being subject to process, refuse to contribute, the other partners shall contribute their share of the liabilities, and, in the relative proportions in which they share the profits, the additional amount necessary to pay the liabilities.

(5) An assignee for the benefit of creditors of any person appointed by the court has the right to enforce the contributions specified in subdivision (4).

(6) Any partner, or his or her legal representative, has the right to enforce the contributions specified in subdivision (4), to the extent of the amount that he or she has paid in excess of his or her share.

(7) The individual property of a deceased partner is liable for the contributions specified in subdivision (4).

(8) When partnership property and the individual properties of the partners are in possession of a court for distribution, partnership creditors have priority on partnership property and separate creditors on individual property, saving the rights of lien or secured creditors as previously.

(9) Where a partner has become bankrupt, or his or her estate is insolvent, the claims against his or her separate property rank in the following order:

(i) Those owing to separate creditors;

(ii) Those owing to partnership creditors;

(iii) Those owing to partners by way of contribution.

History of Section. (R.P.L. 1957, ch. 74, § 40; P.L. 1996, ch. 270, § 1.)