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cfortunato
cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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If someone files personal bankruptcy, is their share of ownership

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If someone files personal bankruptcy, is their share of ownership in a limited partnership (hedge fund) subject to liquidation to satisfy the bankruptcy?

cfortunato :

Hi - my name is XXXXX XXXXX I'm a Bankruptcy attorney here to assist you.

cfortunato :

Whether or not a partnership share is subject to liquidation depends on whether or not the share has a market value - that is, whether or not the share can be sold - and if it can be sold, how much the share can be sold for.

cfortunato :

If the share has no market value, it cannot be liquidated. If the share does have a market value, but the debtor has an available exemption to use to protect the share, then the share also cannot be sold.

Customer:

Ok, the situation is that the person considering bankruptcy is the managing member of the LLC which is the general partner of a limited partnership (hedge fund). The assets of the hedge fund are based on stock prices on a given day and can be liquidated at any time.

cfortunato :

The portion of the hedge fund assets that belong to the person who is considering filing a Bankruptcy would be subject to the Bankruptcy estate. This means that portion would be subject to liquidation - unless the Bankruptcy filer has an exemption or exemptions available to protect his portion of the hedge fund assets.

Customer:

Ok, thanks.

cfortunato :

You're welcome!

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