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Court Of Chancery Explains Partnership Distribution Rights And Power of GP

Posted In LP Agreements

ESG Capital Partners II L.P. v. Passport Special Opportunities Master Fund L.P,  C.A. 11053-VCL (December 16, 2015)

This is an interesting decision for 2 reasons. First, the Court explains what might have seemed obvious to most, that the LP agreement governs the rights of the limited partners to partnership distributions. Generally, each limited partner is to receive what each other similar limited partner receives and no side deal can alter what the LP agreement says in that respect. Second, the GP has only the rights to do what the partnership agreement says he can do. Thus, the GP cannot give some limited partners special privileges absent explicit authority to do so in the agreement.

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