A limited partnership is in the nature of an investment. ( Kramer v. McDonald's System, Inc. (1979), 77 Ill.2d 323, 332, 396 N.E.2d 504.) Through his contribution, the limited partner becomes entitled to share in the profits and losses of the partnership, though his share of the losses will not exceed the amount of capital initially contributed by him to the enterprise. ( Kramer v. McDonald's System, Inc. (1979), 77 Ill.2d 323, 332.)

In re SGK Ventures, LLC, 521 B.R. 842, 861 (Bankr. N.D. Ill. 2014) (citing Estate of Kaplan, 67 Ill. App. 3d 818, 828, 384 N.E.2d 874, 881 (Ill. App. Ct. 1st Dist. 1978). See also Kramer v. McDonald's System, 77 Ill. 2d 323, 330-31, 333, 396 N.E.2d 504, 507 (Ill. 1979) ("we think that the pleadings, depositions, affidavits and documents on record clearly evince that the $90,000 was intended as a contribution to the capital of the limited partnership. . . .

Counsel has cited no Tennessee case to this Court, nor has our research revealed any, which specifically addresses the question of whether a limited partner may enjoy the priority status of a partnership creditor with regard to the limited partner's capital contribution. However, in Kramer v. McDonald's Sys., Inc., 77 Ill.2d 323, 33 Ill.Dec. 115, 396 N.E.2d 504 (1979), the Illinois Supreme Court considered that precise question. That court held that the limited partner is prohibited by the express provisions of the Uniform Limited Partnership Act (1916) (U.L.A.) § 16, as codified in the Illinois statutes, from accepting collateral as security for his capital contribution.

We conclude that the answer is that he may not." ( Kramer v. McDonald's System, Inc. (1979) 77 Ill.2d 323 [33 Ill. Dec. 115, 396 N.E.2d 504, 507].) On these authorities it is perfectly clear that limited partners determine to place the amount of their contribution at risk.

While Illinois recognizes illegality as an affirmative defense to a breach of contract action, the defense applies where the contract itself is illegal. See, e.g., Kramer v. McDonald's Sys., Inc., 77 Ill.2d 323, 33 Ill.Dec. 115, 396 N.E.2d 504, 508-09 (1979) (holding Illinois's Uniform Limited Partnership Act prohibited a limited partner from taking collateral to secure repayment of his capital contributions and franchisor had standing to assert this as a defense to limited partner's conversion action); Cothran v. Ellis, 125 Ill. 496, 498-99, 16 N.E. 646 (1888) (assuming that a note representing debt for gambling transactions would be against public policy); Am. Buyers Club of Mt. Vernon, Ill., Inc. v. Grayling, 53 Ill.App.3d 611, 11 Ill.Dec. 449, 368 N.E.2d 1057, 1058-61 (1977) (holding that an unconscionable contract for "membership" in a "buyer's club" that violated Regulation Z and the Truth in Lending Act in failing to disclose finance charges was void and note was unenforceable). Furthermore, where, as here, the statute allegedly violated "is federal, federal law determines . . . whether the statute was violated but also, if so, and assuming the statute itself is silent on the matter, the effect of the violation on the enforceabilit

Nearly every court that has interpreted section 13 has read the insolvency restriction as applying to subsection (a)(1) as well as to subsection (a)(2). See Hughes v. Dash, 309 F.2d 1 (5th Cir. 1962); A.T.E. Financial Services Inc. v. Corson, 111 N.J.Super. 254, 268 A.2d 73 (N.J.Super.Ct. Ch.Div. 1970); see also Kramer v. McDonald's System, Inc., 77 Ill.2d 323, 33 Ill.Dec. 115, 396 N.E.2d 504, 507 (1979); Grainger v. Antoyan, 48 Cal.2d 805, 313 P.2d 848 (1957). Nonetheless, First Commercial relies on one authority that supports its "plain language" interpretation of subsection (a)(1).

For instance, the Illinois Supreme Court concluded that a promissory note was unenforceable because it was granted to a limited partnership at the time of its formation indicating that it was a capital contribution in substance, and because the purported lender took a loss on his tax return that was only possible if the transfer to the limited partnership was intended as equity. See Kramer v. McDonald's Sys., Inc., 396 N.E.2d 504, 508 (Ill. 1979). The court concluded that these circumstances demonstrated that the transfer in question was "intended" as a capital contribution, not a loan.

In order for an assignment to be valid, "there must be an intent to effectuate one, and that intent may be reflected by any instruments executed by the parties, as well as from surrounding circumstances." In re Cycle Prods. Distrib. Co., 118 B.R. at 645 (quoting Kramer v. McDonald's Sys., Inc., 378 N.E.2d 522, 536 (Ill. App. Ct. 1st Dist. 1978), aff'd 396 N.E.2d 504 (Ill. 1979)). Community Bank states that the intent of the parties was not only to transfer the Gabriel Oak Park Note, but also the collateral securing it, including the priority security interest in the Policy.

In order for an assignment to be valid, “there must be an intent to effectuate one, and that intent may be reflected by any instruments executed by the parties, as well as from surrounding circumstances.” In re Cycle Prods. Distrib. Co., 118 B.R. 643, 645 (1990) (quoting Kramer v. McDonald's Sys., Inc., 61 Ill.App.3d 947, 19 Ill.Dec. 21, 378 N.E.2d 522, 536 (1978), aff'd77 Ill.2d 323, 33 Ill.Dec. 115, 396 N.E.2d 504 (1979)). Community Bank states that the intent of the parties was not only to transfer the Gabriel Oak Park Note, but also the collateral securing it, including the priority security interest in the Policy.

Through his contribution, the limited partner becomes entitled to share in the profits and losses of the partnership, though his share of the losses will not exceed the amount of capital initially contributed by him to the enterprise." Kramer v. McDonald's System, Inc., 77 Ill.2d 323, 332, 396 N.E.2d 504, 508 (Ill. 1979). The Ohio limited partnership statute states that a partnership interest, "means a partner's share of the profits and losses of a limited partnership and the right to receive distributions of partnership assets."