Partnership Winding Up

Upon dissolution of a partnership, partnership assets are distributed in the following order: (1) payment to outside creditors, (2) repayment to partners who are creditors of the partnership, (3) return of partners’ capital contributions, and (4) distribution of any remaining assets to the partners according to their ownership interests. If the partnership’s assets are insufficient to satisfy outstanding liabilities, the remaining debts are allocated among the partners based on their respective ownership percentages.