Bankruptcy is a common trigger of an involuntary transfer. You don’t want to be partners with a partner’s creditors. Generally, you want to keep it in the family (or within the existing partners with whom you’ve agreed to be in business together). Having a creditor as a partner is likely bad news. The creditor is disinterested in the business; it wants its money and will try to sell its shares or extract distributions as fast as possible. This is more or less possible depending on the type of entity though. Creditors are not interested in participating so they are deadweight. They may not be an ally or even pleasant either. Generally, it is highly advisable to build in triggers for bankruptcy to protect the business.
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