There are a number of options available to Partnerships.
Options available include:
- Trading out / Informal arrangements
- Partnership Voluntary Arrangement (PVA)
- Seperate Interlocking IVAs
- Partnership administration
- Insolvency of LLPs
Trading out / Informal arrangements
In an informal arrangement, the principles and actions taken by partners are often the same for individuals and companies. A critical issue is that one or two partners may make decisions for the partnership as a whole, and if things go wrong, all of the partners can be personally affected.
It is therefore critical for all partners to be made aware of these key decisions and the financial position of the partnership business. Also, former partners coupld be at risk if the debts incurred arose whilst they were partners.
Partnership Voluntary Arrangement (PVA)
A PVA largely follows the same procedures as a CVA for companies. However, it is crucial to note that PVA alone will not bind the creditors of partners with any personal individual debts (i.e. individual debts needs to be dealt with via a seperate voluntary arrangement).
Seperate Interlocking IVAs
Where there are individual debts, as well as debts of the partnerships, it might be advisable to consider interlocking IVAs for each partner. In this way both partnership and individual debts will be covered.
A partnership administration closely follows that of a company administration. It should be noted that in a partnership administration, the IP takes control of the business.
Insolvency of LLPs
The options in respect of LLPs closely follw that of company options.
Back to: The Options
A PDF version of the full guide to 'Business Rescue and the Insolvency Process' is available to download here.
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