Wind Up My Partnership

Winding Up Your Partnership? What Are The Options?

If you want to wind up your partnership there is a right way and a wrong way to do it, as with most things.

Where the partners have decided that the partnership has no viable future or purpose then a decision may be made to cease trading and wind up the partnership. This is a drastic final solution and it may be that other solutions could be taken that better achieve the desired purpose such as a Partnership Voluntary Arrangement (PVA) or a Partnership Administration. It is important to recognise that partnership and individual debt both need to be taken into account at the same time.

As with winding up a company, there are two basic ways that the partnership can be wound up: the creditor’s petition and a partner’s petition

Creditor’s Petition
A creditor can petition to wind up the partnership but not issue bankruptcy petitions against the individual partners. Alternatively, the creditor can issue a petition to wind up the partnership concurrently with a bankruptcy petition against one or more of the individual partners.

Partner’s Petition
The partners can petition to wind up the partnership but not issue bankruptcy petitions against the individual partners. Alternatively, the partners can issue a petition to wind up the partnership concurrently with a bankruptcy petition against the individual partners.

The Advantages of Winding up
By winding up the partnership themselves, the partners as individuals may avoid the disqualification of the partners and as company directors, however this will depend on their actions before the failure of the partnership and also whether they had acted at all times correctly and in the creditor’s interests.

The creditors will generally know that an insolvency practitioner must be appointed in cases where the winding up process is used. This can sometimes ensure a better return, an investigation into the officers conduct prior to the insolvency and the knowledge that the partnership will not increase debts.

In rescue and restructuring work the partnership can quickly terminate leases and contractual liabilities.

Winding up can be an expensive process, but the cost of the work undertaken may be recovered from the assets of the business as long as there are sufficient funds to do so. But if the assets are insufficient the partners themselves must make up the fees and costs shortfall. From the partner’s perspective, winding up can lead to their personal bankruptcy if they are called upon to make good the deficiencies of the partnership. But this can be run along side an IVA to prevent this.

If you would like to talk about winding up your partnership to a specialist with 17 years corporate insolvency experience then enter your details into the web form below for a no-obligation chat.

However, if you need help with personal debt (rather than business related debt) go to our free debt management plan application form.

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