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Margaret Reichenbach v. Southport Partners - 12/2/1994

Case Summary: Margaret Reichenbach owned a one-third interest in an investment banking and financial advisory partnership called Southport Partners, which she joined in 1988. She withdrew from the partnership in 1993, and sought, in court, the dissolution of the partnership, a winding up of its affairs and her share of the partnership's assets under Connecticut's partnership law. Southport Partners resisted winding up the partnership, and Ms. Reichenbach asked the court to appoint a receiver to wind up the partnership or alternatively for an injunction, setting aside funds to ensure that her partnership interest would be preserved during the dissolution proceeding. Ms. Reichenbach possessed evidence that Southport Partners was manipulating its assets and business records in a manner that would cause her substantial partnership interests to be lost if extraordinary relief, such as injunction, was not issued pending a full resolution of the partnership wind-up. (The Court also ordered the dissolution proceeding to be decided by a NASD arbitration panel, because part of Southport Partners business was managed through a NASD registered broker-dealer.) The Court granted Ms. Reichenbach's request for an injunction, and directed Southport Partners to either deposit $600,000.00 into an interest-bearing account or to refrain from making any expenditure not in the normal course of business, including any payments in the form of bonuses or profit distribution. The Court also prohibited Southport Partners from destroying records, and further directed it to return to its offices any documents that may have been removed (as Ms. Reichenbach had alleged). Finally, the Court permitted Ms. Reichenbach, and us as her counsel, to enter Southport's premises to inspect the partnership's business records. Southport Partners subsequently settled Ms. Reichenbach's claims.

Jeffrey L. Liddle

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