Options for Insolvent Partnerships:
Partnership Voluntary Arrangement (“PVA”)
Broadly speaking, a PVA is a legally binding contract between the partnership and its creditors where the partners want to save the business but cannot afford to pay all of the debts due now.
This is where we obtain a freezing order from the Court placing the partnership into Administration. An Administration Moratorium protects the partnership for a period of time so we can work out whether there is a viable solution or whether the business or its assets can be sold.
Individual Voluntary Arrangement
Broadly speaking an Individual Voluntary Arrangement (“IVA”) is a contract between the individual debtor and their creditors.
If one of the partners in a partnership is bankrupted, the partnership can be automatically dissolved on the making of the Bankruptcy Order often forcing the partnership to cease trading and leaving the remaining partners liable for some or all of the partnership liabilities.