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Q+A: Potential Embezzlement

Q: I am a limited partner. I suspect that the general partner converted funds belonging to the limited partnership. How do I sue on behalf of other limited partners?
A: A general partner is a fiduciary to limited partners, much as a director is to shareholders in a corporation. This means that the gp account for his actions to the limited partners and at all times conduct itself with the utmost good faith. If those rules were not observed then the proper remedy is a derivative suit – so named because the complaining party must sue in the name of the limited partnership. Before filing suit however certain questions must be answered and you may need to hire a forensic accountant to fully investigate. Finally, keep in mind that if the limited partnership or the general partner need(s) to file bankruptcy then a post-filing adversary complaint is your route.

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