First, the Losses of the firm will be paid out. The Assets of the firm and the capital contributed by the partners to set-off losses of the firm will be applied :
Third party debts will be paid first. Next, loan amount taken by a firm from any partner will be repaid to that partner
Capital contributed by each partner will be repaid to him in the capital contribution ratio. Balance amount will be shared among the partners in their profit sharing ratios. Upon realization, all assets will be sold off in the market, and the cash realizing out of such a sale will be used for paying the liabilities. Assets or liabilities may also be taken over by the partner(s) for which the respective partner capital accounts will be adjusted by such amount.