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Partnership Administration FAQs

28 June 2019

Partnership Administration FAQs

Useful links for this page - A Guide

Q: I have heard this protects the unregistered company (the partnership) from its creditors- how?

A: The partners (or a creditor) petitions  for and administration order which grants a partial moratorium, then the court grants the full moratorium (usually).

Q: What actually happens in Administration?

A: See the full guide at Partnership Administration.

Q: What will my creditors think?

A: Well, of course, they will be concerned. They will need to be kept informed and the partnership must inform them that an administrator has been appointed on all correspondence. They will not (probably) provide credit but they may continue to trade on a pro-form basis. If the partnership proposes a PVA or simultaneous IVAs they will have a vote to support or reject the deal.

Q: Do we stay in control after the Administration starts?

A: No, the administrator runs the partnership and will determine the outcome. Obviously he /she will want to use all available support where appropriate.

Q: What will HMRC say?

A: They will be keen to know what the intended outcome of the administration process is. If it is a voluntary arrangement then they will have a vote at a creditors meeting to support or reject the administrators voluntary arrangement proposals. But they will seek to scrutinise the deal and the actions of the partnership prior to the insolvency. They will be concerned to ensure that future taxes are paid on time and within the scheme rules.

Q: What can the landlord do?

A: The landlord cannot take any action (unless the court allows) once the administration order is granted.

Q: I am worried that one partner is gambling etc. What can we do?

A: Do you have any partnership agreement that states what disclosures of a partners financial position are available?

If yes, calling on this as a partnership agreement can determine the process of dealing with such problems.

If no, discuss with the partner whether:

  1. Has he/she had any distress?  For example have any creditors sent in bailiffs or sheriffs for debt collecting purposes).
  2. Have they had any County Court Summonses?
  3. Have they had any County Court Judgements? (What are they?)
  4. Have they had any writs?
  5. Have they had any statutory demands?

If he/she has, this can lead to the domino effect. (See our guide by clicking). It is essential that you take a planned and practical approach to the individual partners insolvency as this can bring down the whole partnership and or the other partners.

Q: Will I lose my home if the administration process leads to failure?

A: This is a very complex insolvency procedure. We therefore cannot say what the individual circumstances will lead to. Be very sure that you take independent advice. Call 0800 9700539.

Q: There are parts of the business that are simply not viable. Can they be discontinued/removed?

A: This is dependent on the aim of the Administrator and the outcome could be that parts or all of the business can be sold. Using a PVA or SIMIVA, it could be possible to extricate from leases/property etc. Again this is very complex. 0800 9700539.

Q: We are not facing legal actions and can keep the bank happy but in two months we will run out of cash. Is Partnership Administration the answer?

A: Probably not. Consider Trading Out, Informal Financing, PVA, SIMIVA.

ABOVE ALL, ACT SOON! If the business is contingently insolvent you must do something about it in sufficient time to allow a strong appropriate solution to be planned. Call now we can help. (Call 08009700539).

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