How to wind up a Partnership
Insolvent Partnerships - How can they be wound up?
Unless a Partnership is a Limited Liability Partnership, or LLP, then each individual partner is jointly and severally liable for all of the debts of the Partnership. Therefore not only can the Partnership be wound up but also bankruptcy orders can be made against the individual partners.
How to Wind Up a Partnership if you are a Creditor
The first step is to obtain a Court Judgment against the Partnership to prove that the amount you are claiming is properly due and enforceable.
As a judgment creditor of that partnership, you can then make a further legal application to enforce your judgment. You then have a choice of three different ways to enforce your judgment against the partnership (as far as winding up is concerned) - either:
1. For the winding up of the insolvent partnership as an unregistered company with no action being taken against the individual partners under Article 7 of the Insolvent Partnerships Order 1994; or,
2. the winding up of the insolvent partnership as an unregistered company where bankruptcy petitions are also presented against one or more of the partners under Article 8 of the Insolvent Partnerships Order 1994; or,
3. As the individual partners are also personally liable for the debts of the Partnership, a creditor of a partnership can, in the alternative, petition for the bankruptcy of one or more of the partners, without petitioning for the Partnership to be wound up. In other words you can see to enforce the individual who is known to be strong asset wise, as there is no point incurring additional costs enforcing against a partner who you know does not have any assets with which to settle the sums owed to you.
How to Wind Up A Partnership if you are a Partner
If you are a member of a solvent Partnership and you wish to bring it to an end then it is always best to seek to achieve that end amicably.
If however your partnership is insolvent it is possible for you to bring your own petition to wind up your own partnership under Article 9 of The Insolvent Partnerships Order 1994.
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