Withdrawal
I went back to review our procedures. It appears we have been operating in violation of our PA. Our PA states that all withdrawals are valued as of the next official valuation date after the meeting where the withdrawal request is received. (In our case, that is the end of the month.) While we do that for full withdrawals, we have been valuing partial withdrawals using the valuation at the meeting. (For clubs that use the "day of" valuation for deposits, they should use the "next day" valuation for withdrawals.) We've only had three individual partial withdrawals in 20+ years of existence.
We also have had mandatory partial withdrawals in December of each year for the past five years due to our desire to avoid a $150/member annual fee to NJ. The December withdrawal is determined as a total amount which is then allocated to each member on the basis of their November Member Status Report share.
Len, I'll have to give some thought as to how to correctly enter a partial withdrawal prior to the valuation date. I have an idea, but I'm not sure how it will interact with other transactions that might take place between the payment and valuation dates.
Ira Smilovitz
This discussion is very interesting but also has created some confusion (at least for me). In general, it had been my understanding that the transaction date always needed to follow the valuation date. If an immediate payment is made for a partial withdrawal, is this the transaction date? Even though its before the valuation date?
Or is the immediate payment a third date related to the withdrawal. Can some one outline the steps and relationship of dates if an immediate payment is made as Ira suggests.
Thanks in advance!
Len Delmolino
Massachusetts High Flyers Investment ClubOn 01/03/2022 7:01 PM ira smilovitz via bivio.com <user*2883400001@bivio.com> wrote:
"However, if the powers that be at Bivio say it is ok , then it is ok."
I don't think any of the powers that be at bivio said it was ok. My statement was the closest to that - and rereading it, my statement is a bit vague and misleading. My comment was that if one of our members requests a fixed dollar partial withdrawal, we pay it immediately. There is no question what the amount is and there is no question of timing the market. The only question is how many units does that dollar amount represent? We follow our partnership agreement to determine the correct valuation date and we value the withdrawal (in terms of how many units) on that date.
Ira Smilovitz
It seems to me that not following the partnership agreement is an invitation to disaster. Think "you did it for partner A , why can't you do it for me?" You could amend the Partnership agreement, but the resignation occurred prior to any amendment . The PA is the document to which you all agreed. Follow it for now, the pain will be temporary, amend it later. However, if the powers that be at Bivio say it is ok , then it is ok.
Peter Dunkelberger
On Mon, Jan 3, 2022 at 3:03 PM Laurie Frederiksen <laurie@bivio.biz> wrote:
The wording for timing of withdrawal payouts in the recommended partnership agreement is there to keep members from trying to time the market and make excessive withdrawal requests in a short period of time. This could be very disruptive to club operations.
Your club could certainly override this in extenuating circumstances if everyone in your group agreed, but I would not be too quick to remove it as the procedure you agree to in your partnership agreement.
A club should not be thought of as a short term cash depository by members.
Laurie Frederiksen
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Could a Club Treasurer issue a check to a partner for a partial withdrawal before doing the calculation?(Sort of like giving an employee an advance before payroll is calculated.)Obviously, the w/d needs to be enough less than the partner's value that there are no anticipated issues. I'm assuming that the Partner is requesting a cash amount (say, $2000) instead of an amount based on their % ownership.
Linda
We've experienced in the few partial withdrawals we've had over many years that on some occassions a partial withdrawal is needed for an emergency (like lack of money).Perhaps I am reading it wrong, but is the Partnership Agreement saying a partner would have to wait almost 2 months for a withdrawal? (Per para. 18A from Abraham)
Example. A partner sends a request for a partial withdrawal one week after the monthly meeting (ie, say the meeting was 12/15/21 and the partner email his/her written request 12/18/21).
The next meeting say is 1/15/22 - which would be the meeting the request would be 'deemed as received'.
* 18A. In making payment, the value of the partnership as set forth in the valuation statement prepared for the first meeting following the meeting at which notice is received from a partner requesting a partial or full withdrawal, will be used to determine the value of the partner's account.
Does this mean the partner requesting a withdrawal would not receive payment until the February valuation statement is run?
Just trying to get clarity and determine if we need to re-word our PA. I think our Treasurer has been paying out on based on the valuation statement closest to when the request was received, but I know it hasn't taken two months.Thanks, Jeff
On Friday, December 31, 2021, 04:31:45 PM CST, Joanne Hermiston <hermiston@bivio.biz> wrote:
Hi,It is important to verify that all your bivio records are correct before you make any withdrawal entry.
You need to follow the terms laid out in the partnership agreement for entering the withdrawal. It should describe what to use as the valuation date and the transaction date.
Hope that helps. Contact us at support@bivio.com for any further guidance.
Joanne Hermistonbivio support team
Peter, thanks.
Abe
On Fri, Dec 31, 2021 at 3:33 PM Peter Dunkelberger viabivio.com <user*26984900001@bivio.com> wrote:
So your meeting date establishes valuation date ( "...the value of the partnership as set forth in the valuation statement prepared for the first meeting following the meeting at which notice is received..."), it seems the partnership got a bit ahead of itself. When was the first meeting following the meeting at which the withdrawal notice was deemed received? You need that valuation and you need that date to establish valuation. Then you need to look at the check and see the difference between what you paid and the valuation. On the other hand, since it is a partial withdrawal, what you paid is what he got, so perhaps it makes no difference in the amount received. I would stick with the partnership valuation date, but since it was a partial withdrawal, use the partnership valuation date to establish basis and value.
Peter Dunkelberger
On Fri, Dec 31, 2021 at 2:27 PM Abraham Morrall, Jr viabivio.com <user*38189900001@bivio.com> wrote:
The partnership agreement states:
18. Voluntary Withdrawal (Partial or Full) of a Partner. Any partner may withdraw a part or all of the value of his capital account in the Partnership and the Partnership shall continue as a taxable entity. The partner withdrawing a portion or all of the value of his capital account shall give notice of such intention in writing to the Partnership. Written notice shall be deemed to be received as of the first meeting of the partnership at which it is presented. If written notice is received between meetings it will be treated as received at the first following meeting.
* 18A. In making payment, the value of the partnership as set forth in the valuation statement prepared for the first meeting following the meeting at which notice is received from a partner requesting a partial or full withdrawal, will be used to determine the value of the partner's account.