Helping Partners Through Insolvency
Insolvency Options Available to Partners
We have compiled a list of insolvency related issues that you may encounter as a partner below, if you cannot find the information that you are looking for, please get in touch.
If your partnership is experiencing cashflow issues, your first step should be to understand and minimise your outgoings as much as possible, cutting out and reducing expenditure in areas that are not currently/immediately beneficial to your business. if your partnership becomes insolvent you must consider starting formal insolvency proceedings (engage a Licensed Insolvency Practitioner, such as Purnells). You can also consider raising your prices, adjusting your invoice terms to realise cash sooner and look in to ways of deferring debt and large payments to a later date. For more information, please see our section on cashflow issues.
Given a Personal Guarantee?
If you are operating a Limited Liability Partnership and have issued a personal guarantee (PG) and the LLP becomes insolvent, you are personally liable for that debt should the LLP fail to meet it's obligations and your personal assets could be called upon to settle the debt. If the LLP is still solvent and you have not yet obtained Personal Guarantee Insurance, it may be worthwhile, which can cover some/most of the debt should it be called upon, subject to the terms of your guarantee and insurance. A PG is legally binding providing it was drawn up and signed in good faith and understanding of both parties. If the LLP is being replaced by a phoenix LLP, you may be able to restructure your guarantee.
If you are operating an 1890 Partnership, you will already be personally liable for the debts of the partnership and therefore you may need personal insolvency advice, as well as insolvency advice in respect of the partnership.
If your partnership has a debt to HMRC, which you cannot currently settle in full, you may enquire with them about a "Time to Pay Arrangement" whereby you can repay the debt monthly in instalments instead of as a lump sum. For more information, please see our HMRC debt section.
Want to Continue Trading?
If the partnership's underlying business is profitable but has been hit by a one off issue, such as a bad debt, coronavirus, loss of one contract, and you simply need time to work through the issue and/or restructure the debt. A Voluntary Arrangement may be an option that you could consider. More information can be found at our Partnership Voluntary Arrangement section.
Would you like us to give you a call?
Fill in the form and we'll give you a call as soon as we can to discuss your needs in a free initial consultation with a Licensed Insolvency Practitioner. Alternatively give us a call on 01326 340579 if there is an urgency to your needs.