Benefits of Interlocking Individual Voluntary Arrangement Proposals for partners
Benefits of dealing with partnership & personal creditors over a three or four year period
Quite often when a partnership voluntary arrangement proposal is put forward to creditors of the partnership each of the individual partners has to propose individual voluntary arrangements (sometimes called interlocking IVA's) to address their personal financial positions.
This is because each of the partners has an individual personal liability for all of the creditors of the partnership. The legal concept is called "joint & several liability". In other words any partnership creditor can sue a partner in his individual capacity. The failure or financial problems of a partnership therefore cause equal and opposite problems for each of the individual partners.
To address the problem of joint & several liability an individual partner can propose an Individual Voluntary Arrangement, either alone or by having a similar but "interlocking" individual voluntary arrangement with his other partners, Interlocking voluntary arrangements are separate Individual Voluntary Arrangements but each of which have similar provisions as to how to deal with the partnership debt burden.
Details of Individual Voluntary Arrangements can be found in another section of this site.
To read a case study on how Individual Voluntary Arrangements may benefit each of the partners in a partnership, please follow this link.