April 14, 2020

Can an LP withdraw its capital commitment?

LPs cannot withdraw their capital commitments after they have been accepted at a closing. However, until subscription documents have been delivered to the GP, there is no legal obligation on the LP's side.

If the subscription has been executed by the LP and submitted to the GP but no closing has yet occurred, it must be scrutinized in each case whether such LP may still withdraw its commitment. However, even in cases where the subscription offer is legally binding, GPs may want to face a defaulting LP as from day one.