Question
Ricardo was a general partner of Favorite Farms, a limited partnership with Fresco and Tollerance as limited partners. The three were in the business of
Ricardo was a general partner of Favorite Farms, a limited partnership with Fresco and Tollerance as limited partners. The three were in the business of truck farming: raising produce and selling it to local brokers. Under their business arrangements all checks written by Ricardo had to be cosigned by either Tollerance or Fresco. Business became bad, and Ricardo was considering to be managing poorly. As they wanted to salvage the firm, Fresco and Tollerance then voted to remove Ricardo, which they did. However, they were not successful in saving the firm, and Favorite Farms went into bankruptcy. Fresco and Tollerance lost over $300,000, and neither Ricardo nor Tollerance had any assets. Fresco, however, is still a wealthy man. The creditors demanded that Fresco pay the outstanding debts as the firm could only pay ten cents on the dollar. Fresco, citing the $200,000 loss of his own capital contribution, contends that he has suffered enough and also that he is a limited partner. What success will the creditors have in demanding the other 90 cents on the dollar of unpaid debts of Favorite Farms? Decide and give comprehensive reasons for your conclusions.
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