Partnership insolvency

In 2001 the concept of limited liability partnership (LLP) was introduced thereby creating two types of partnerships to be considered in relation to any formal or informal rescue procedure.

An unlimited liability partnership

All partners are jointly and severally liable for the partnership debts. Therefore, in the event the partnership assets are insufficient to settle the liabilities in full creditors are entitled to take recovery proceedings against all or some of the partners for the amount due. In respect of this type of partnership, the insolvency procedures that apply to the partnership are those discussed in corporate insolvency above in that the partnership can become subject to a winding up order although the individual partners obviously fall under the banner of personal insolvency below. The primary rescue procedure is the Partnership Voluntary Arrangement, the underlying principles of which are based on a company voluntary arrangement. As regards the individual partners as they are liable for the partnership debts it may prove necessary to propose personal interlocking voluntary arrangements in respect of each separate partner.

A limited liability partnership

This is a corporate entity where the partners, known as members, have as in a company a limited amount of liability for the partnership debts. Therefore, as a corporate body an LLP is subject to the same insolvency and rescue procedures as discussed in corporate insolvency above.

If you would like some more information on the partnership insolvency services we provide, please contact partnership.insolvency@aabrs.com