The Insolvent Partnerships Order 1986 - Insolvency Options & Choices
Partnership Insolvency Options
The Insolvent Partnerships Order 1986 allows for insolvent partnerships to be wound up as an "unregistered" company and gives a creditor a choice of other insolvency action against one or more of the partners.
The Insolvent Partnerships Order Order therefore allows a petitioning creditor the choice to:
- Wind up the insolvent partnership only or
- Wind up the insolvent partnership and/or present a separate petition against two or more partners
- Without winding up the partnership, present bankruptcy petitions against one or more partners
- Without winding up the partnership, present bankruptcy petitions against all partners.
Partners if all agreed, can petition for their own bankruptcy which will result in the Trustee/Liquidator winding up the partnership. Because creditors have so many different alternatives available to them to extract money from a partnership, it is clear that early professional advice is needed for you to consider what is best for your partnership. There are ways for partnerships to obtain extended credit from their creditors by opting, for example, for a Partnership Administration or Partnership Voluntary Arrangements. The insolvency options under The Insolvent Partnerships Order 1986 are therefore not all creditor friendly - Many of the insolvency options are designed to save the partnership.