Can Creditor Foreclose The General Partner's Interest In A Limited Partnership?
A few days ago an attorney submitted an interesting question about creditor remedies against general partnership interests. As background, a general partnership is an equal partnership among two or more joint venturers as opposed to a limited partnership which consist of a general partner/manager and limited partner/investors. Florida law permits a creditor to foreclose the interest of a partner in a general partnership. Florida law states that a charging lien is the exclusive creditor remedy against limited partnership interests. The question is whether a creditor can foreclose the interest of a general partner of a limited partnership. In other words, is the creditor remedy determined by the type of interest or the type of partnership?
I’ve come across this question previously. I could not find any Florida court decisions on this issue last time I looked. In my opinion, a creditor cannot foreclose the partnership interest of the general partner in a limited partnership. The reason is that the relevant statutes restrict creditors to a charging lien against the interest of a "partner" in a limited partnership and permit foreclosure of "a partners" interest in a general partnership. The limited partnership creditor section does not distinguish general and limited partnership interest when it makes charging liens the exclusive remedy.
