When a partnership encounters financial difficulty it can be put into administration by the partners or a creditor.
The court will only grant the order where it is satisfied that the partnership is unable to pay its debts and where one of the following can be achieved:
- The rescue of the partnership as a going concern
- The agreement to a partnership voluntary arrangement (‘PVA’) under which the debt can be restructured
- To provide a better return to creditors than would be possible via a liquidation
Where a partnership administration order is granted, an administrator is appointed who takes control of the affairs of the business. Creditor action to recover debts from the partnership are prevented so as to protect the business from any harm whilst in administration.
The administrator works with the partnership to achieve a rescue or restructure so that the business can be handed back to the partners or to achieve one of the other two purposes of the partnership administration order.
Contact us if you would like further information and assistance regarding any aspect of administration for your business. There is no charge for doing so and it is without obligation.