Opinion ID: 668554
Heading Depth: 2
Heading Rank: 2

Heading: Dissolution Under DRULPA Sec. 17-802

Text: 13 We now turn to the merits of appellants' argument that it was error to dissolve the PIF II and PIF III limited partnerships. The district court granted summary judgment dissolving the partnerships under Sec. 17-802 of the DRULPA. Section 17-802 states: 14 On application by or for a partner the Court ... may decree dissolution of a limited partnership whenever it is not reasonably practicable to carry on the business in conformity with the partnership agreement. 15 Del.Code Ann. tit. 6, Sec. 17-802. Under the plain language of the statute, any limited partner may petition the court to dissolve a limited partnership when it is not reasonably practicable to carry out the partnerships' business in conformity with the partnership agreement. See PC Tower Ctr. v. Tower Ctr. Dev. Assocs. Ltd. Partnership, Civil Action No. 10788, 1989 WL 63901, at  6, 1989 Del.Ch. LEXIS 72, at  16 (Del.Ch. June 8, 1989) (The standard set forth by the Legislature is one of reasonable practicability, not impossibility.). 16 Although admitting that the partnerships cannot survive under the strictures imposed by the original Agreements, appellants argue that the partnerships may become viable business entities under the Restructuring Plan. Because implementation of the Restructuring Plan could quite possibly enable the partnerships to carry out the Agreements' purpose to make, acquire, hold, sell, exchange and otherwise engage in transactions involving mortgage loans for profit, appellants submit that it was error to grant summary judgment. We disagree. 17 Appellants misconstrue the nature of the inquiry. The issue is not whether the partnerships can effectively carry out the general purpose of the Agreements after considerable modification of their terms. Rather, the query under Sec. 17-802 is whether the purpose of the Agreements can be carried out in conformity with the partnership agreement, that is, in conformity with the terms and conditions of the Agreements to which the limited partners ascribed and on which they relied when choosing to part with their capital. 18 The district court correctly ruled that there is no disputed issue as to the impracticability of carrying out the original Agreements. The terms of the Restructuring Plan are substantially at odds with the provisions of the original Agreements. Gone are the maximum loan terms, the minimum interest rates, and the bar against reloaning principal. Also jettisoned are loan-to-value requirements, the limits on loans to a single borrower, the independent fair market value appraisals, and the independent fairness opinions. Westor understated affairs a bit when it admitted that the Restructuring Plan may not comply with all requirements of the Partnership Agreement. The Agreements would be comprehensively and fundamentally altered under the Restructuring Plan. As Westor itself conceded, the original Agreements' requirements were simply no longer affordable or realistic. 19 We therefore affirm the district court's decision to dissolve these partnerships because their business could no longer be carried out in conformity with the respective partnership Agreements.