Partnership Administration- The Process

The Application

To make an application to put the partnership into administration, we will need to firstly draw up a statement of affairs of the partnership which will determine whether the partnership has been wrongfully trading or under the threat from creditors of being wound up.

The partners of the company will be able to petition the court for an Administration Order. However, we would do this for you using one of our experienced and recommended licensed Insolvency Practitioners.

The Insolvency Practitioner will inevitably acquire protection for the partnership from the court by obtaining a partial moratorium. Any legal action that had previously been taken against you will be frozen unless the court grants leave for the action to continue, which is however unlikely.

The Hearing

During the hearing, it will be considered by the court whether the application should be granted in which the court takes into consideration a number of factors regarding the financial circumstances and the future viability of the business. Thereafter the court may grant the order which will give the partnership full protection against any action being brought against the business from your existing creditors. You will be entitled to the full moratorium on the proviso that all conditions are duly met.

The Purpose of the Administration order

The Administration Order will only be granted if one of the following occur;

1. A partnership voluntary arrangement is proposed
2. The business is a going concern
3. Assets are realized in a more orderly process than they would be in winding up procedures.

Over the following 3 month period or possibly longer if an extension is granted by the court the IP will make a proposal to the creditors and the members of the partnership to consider. A creditors meeting will be called to allow creditors to consider the proposals and address any questions or concerns they may have.

If the aim of the proposal involves survival or realization, it only requires a simple majority of creditors to vote in favour. If on the other hand a PVA is proposed, it will require at least 75% of the creditors to vote in favour of the proposal.