Partnership Administration Orders - Freezing Partnership Creditors

What is a Partnership Administration Order?

A Partnership Adminisration Order ois extremely similar to an Adminstration in relation to a Limited Company and allows the Partnership to obtain a breathing space against creditors actions. Giving the Partnership time to work out a plan to try to rescue the business.

When can you Apply of a Partnership Administration Order?

You can apply for a Partnership Administration Order Application if the partnership is insolvent and has carried on its business in England or Wales in the previous three years.

Who can Apply for a Partnership Administration Order?

A petition for a Partnership Administration Order can be presented to the Court by:

• partnership members or

• partnership creditors or

• a Partnership Voluntary Arrangement (PVA) Supervisor

A court can grant such a Partnership Administration Order if it is satisfied that the partnership cannot pay its debts and the making of the order would achieve one of the following: -

• the continuance of the partnership as a going concern

• the acceptance of a Partnership Voluntary Arrangement (PVA) under which the partnership debts are effectively restructured

• greater realisations of partnership assets than would occur in a winding up.

What are the Effects of a Partnership Administration Order?

Upon the making of a Partnership Administration Order creditors actions against your partnership are frozen. This is commonly known as a 'moratorium'. When the Partnership is in Administration creditors cannot take action against the Company without the permission of the Administrator or the Court.

Also once a Partnership Administration Order is made, an Administrator is appointed who will deal with the management of the business and its affairs. That Administrator should then work with you in accordance with a pre arranged plan or pre pack agreement to restructure the debts of the partnership and then hand the business back to you after the restructure has been achieved.

The two main advantages of an Administration Order are: 

1. Stops having to go to and fro to the Court for directions.

2. This therefore decreases costs.

A Partnership Administrator has a raft of powers listed in Schedule 1 of The Insolvency Act 1986, and an Administrator can also look to Schedule B1 of the Act for his powers whilst he is in office, and those powers can be viewed by following this link.

If your partnership would benefit from a freeze on creditors actions and a restructuring of the partnership's debts by obtaining a Partnership Administration Order please contact Chris Parkman for a free meeting on 01326 340 570 or email him at help@purnells.co.uk.