General Partner Deficit Makeup Clause Samples
The General Partner Deficit Makeup clause requires the general partner to cover any negative balance in its capital account, typically at the time of liquidation or dissolution of a partnership. In practice, if the general partner’s share of losses exceeds its capital contributions, this clause obligates the general partner to contribute additional funds to restore the deficit. This ensures that the partnership’s creditors and other partners are not disadvantaged by a shortfall, thereby allocating financial responsibility and maintaining fairness among all parties involved.
General Partner Deficit Makeup. If the General Partner has a deficit balance in its Capital Account following the liquidation of its Partnership Interest, as determined after taking into account all Capital Account adjustments for the taxable year during which such liquidation occurs (other than those made pursuant to this Section 12.5), it shall contribute an amount equal to such deficit to the Partnership by the end of such taxable year, or, if later, within ninety days following the date of such liquidation. Any amount contributed to the Partnership pursuant to this Section 12.5 shall be distributed according to Section 12.4.