General partner’s past debts

The general partner in a limited partnership has joint and several liability for his or her partnership’s debts – not just those that were incurred after he or she acceded, but those that were there before as well. This in a nutshell was how the Supreme Court of the Netherlands recently ruled. 

The Commercial Code of the Netherlands stipulates that partners in a commercial partnership and general partners in a limited partnership should have joint and several liability for their partnership’s commitments. According to the Supreme Court this provision should not be construed as an exemption for any particular partner from commitments which the partnership in question assumed before the partner in question acceded to the partnership. It is inherent in the purport of the statutory provisions that the joint and several liability resting with the partners should cover the full complement of debts, be they debts that were there at the time the partner in question joined the partnership or debts the partnership subsequently contracted. The statutory provisions are aimed at protecting the creditors of a commercial or limited partnership in the event that the partnership’s equity falls short of enabling the partnership to fulfil all its obligations. According to the Supreme Court, the fact that existing creditors gain additional means of redress as soon as a new partner joins the partnership does not make this any different.