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kattorney, Attorney
Category: Business Law
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Experience:  16 years experience with a concentration in business, corporate and contracts law
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This involves a private placement offering in a Limited Partnership.

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This involves a private placement offering in a Limited Partnership. The PPM distributed to prospective investors mentions preferential returns/waterfall position for certain classes of investors (LPs). The Limited Partnership agreement does not detail these calculations. Upon the investment being made, do the LPs retain any rights based upon what was detailed in the PPM, or must those details be written into the LP Agreement to be effective?

Kathie Russell :

Hi and thanks for your question.

Kathie Russell :

The provisions should be in the LP agreement to be effective. I suppose if the preferential payments were not made one could sue based upon the representations of the PPM, but that is a potential hassle that no one is going to want to sign up for.

Kathie Russell :

By having it in the LP agreement, the positions are protected.

Kathie Russell :

Also, if actual certificates were distributed, the preferential treatment should be listed on those.

Kathie Russell :

You might also check the LP filings with the secretary of state, since the preferences should be listed there as well. Do you know how to check that online?


I thought so, and yes I know how to use SOSDirect in Texas. LPs, especially for real estate which this is, can be less straightforward in their docs than other business deals so I thought I would check. Thanks.

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