Partnership Insolvency – Partnership Administration
The Partnership Administration Order procedure is available for insolvent partnerships, which have been trading for at least three years. There are many similarities with the Administration procedure for a limited company.
Although Partnership Administration is similar in a number of ways to Administration for a limited company and also has similarities to Administrative Receivership, it must be considered on its own merits and not confused with those procedures.
A Partnership Administration Order is obtained through an application to Court, which has to be convinced that the partnership cannot pay its debts and where one of the following events would be achieved:
- The continued trading of the partnership as a going concern.
- A Partnership Voluntary Arrangement (PVA) can be agreed with the creditors so the partnership’s debt can be restructured.
- A better return for creditors than could be achieved if the partnership was liquidated.
A petition for a Partnership Administration Order can be presented to the Court by the members of the partnership, its creditors or the Supervisor of a Partnership Voluntary Arrangement.
The Administrator appointed by the Court takes control of the affairs of the business. Any ongoing enforcement action by creditors is frozen and no new action can be taken without the permission of the Court or the Administrator.
The Administrator works with the partnership on an agreed plan or a pre-pack sale of its business and assets to ensure either the continuation of the business or the maximisation of the recovery for the creditors. As with an Administration of a limited company, the Administrator has a statutory duty to act in the best interests of the creditors as a whole and cannot favour one or some of the creditors over the others.
For more information on Partnership Administration and the options that are available a finally challenged partnership, or if you are the creditor of a partnership which has gone into Administration, Opus will be pleased to arrange an initial free meeting to review the situation and make recommendations on the best way forward.