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Chancery Finds Former Limited Partner Lacks Standing to Seek Books and Records

Greenhouse v. Polychain Fund I LP, C.A. No. 2018-0214-JRS (Del. Ch. May 29, 2019).

Seeking to inspect an entity’s books and records to value an investment typically is a proper purpose. But a plaintiff must have standing to demand inspection.

Unless otherwise provided in the partnership agreement or established by the general partners, Section 17-305 of the Delaware LLP Act governs the rights of limited partners to inspect the books and records of the limited partnership in which they are invested. See 6 Del. C. § 17-305. However, the statute provides these rights only to current limited partners, a reading bolstered by the books and records statutes governing other Delaware entities.  See 6 Del. C. § 18-305 (LLCs); 8 Del. C. § 220 (Corporations).

In this case, the plaintiff, once a limited partner, brought a books and records action after withdrawing from the partnership. The Court dismissed the action on a motion for judgment on the pleadings because the plaintiff no longer held an equity interest in the partnership under the circumstances and therefore had no standing to demand inspection under the statute.