PARTNERSHIP VOLUNTARY ARRANGEMENT (PVA)
Limited Liability Partnership
An LLP has members and not directors as a Limited Company. The members of the LLP have limited liability regarding the LLP’s debts. LLP’s may use the same insolvency options also as limited companies have. Significant differences in the insolvency provisions Section 214(A) of the Insolvency Act 1986 allow a claw-back of partners’ drawings in certain designated situations.
In that event, partners need to ask advice as soon as possible, when an LLP is in financial trouble.
A Partnership Voluntary Arrangement is known as a PVA
A PVA is a rescue procedure for an unlimited liability partnership. PVA supersedes the agreed terms of the partnership’s existing contracts with its creditors. New terms are within the PVA proposal.
The proposal needs to show that creditors of the partnership, it accomplishes a more favourable outcome when compared to winding up the partnership, which may lead to the bankruptcy of partners. A PVA can be a single insolvency procedure; it may though have an Individual Voluntary Arrangement (“IVA”) attached of each partner.
To do this, you need to demonstrate the viability of the business moving forward. If this can’t be demonstrated, then the partnerships risk being wound up by the Court. Then a further result being the bankruptcy of partners if they are unable to discharge the partnership liabilities.
Winding up of a Partnership
Winding up an unlimited partnership using a Court petition is not too different from that of a limited company. Creditors may serve a statutory demand on the partnership. If it is not satisfied, then the petitioning creditor may proceed to petition to Bankrupt the partners.
With a partnership, assets and liabilities are essential to know who has what and where. Partnership assets realised for creditors of the partnership need to be allocated against those liabilities first. The shortfall, are then met the estates of the partners jointly and severally.
HBG ADVISORY assist partnerships as above.
For immediate help, telephone 0800 612 5448.