Limited partners generally assume that the limited partnership act protects them against debts to creditors of the limited partnership. That’s why investors prefer limited partnerships to general partnerships. But a recent case illustrates the limitations of that assumption.
In Hullett v. Cousins, 32 P. 3d. 44 (Arizona. App. Div. 2001), a creditor of a limited partnership was able to recover distributions from the partnership to its limited partners to satisfy a claim against the partnership that was not even known to the limited partners at the time of the distribution.
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