September 1997

45.153 Modifications to the Act

Part V of the Insolvency Act 1986 as modified by article 7 of the Insolvent Partnership Order applies to the winding up of a partnership where no concurrent petitions are presented against member(s) ie where the petition is presented by a creditor or a responsible insolvency practitioner or the Secretary of State or any other person other than a member and no petition is presented by the petitioner against a member or former member.

45.154 Winding up of partnerships as unregistered companies

Any insolvent partnership may be wound up as an unregistered company if it has, or at any time had, in England and Wales either:

1. a principal place of business; or
2. a place of business at which business is being or has been carried on in the course of which the debt (or part of the debt) arose which forms the basis for the petition for winding up of the partnership.

The above is subject to two exceptions:

1. where the business has not been carried on in England and Wales at any time during the three years prior to the presentation of the petition; or

2. where the principal place of business is situated in Scotland or Northern Ireland, unless the partnership had a principal place of business in England and Wales during the period of one year, where the principal place of business is in Scotland, (or three years for Northern Ireland) before the presentation of the petition.

Notes: [s221 (M)art 7, Sch 3 Part 1, (3)]

45.155 Jurisdiction

Subject to the above (paragraph 45.154), the High Court may wind up any partnership as an unregistered company, and the county court may wind up any partnership as an unregistered company whose principal place of business is (or was) in its insolvency district.

Notes: [s117 (M),art 7, Sch 3 Part 11(6)]

45.156 Who may present apetition

Apart from a creditor or the Secretary of State, the petition may be presented by an insolvency practitioner who is:

1. the liquidator or administrator of a corporate member (or former member); or
2. the administrator of the partnership; or
3. the trustee of an individual member’s (or former member’s) estate; or
4. the supervisor of a voluntary arrangement of a corporate member or the partnership of an individual member, where the petition is presented on one of the grounds set out at paragraph 45.157.

Notes: [s221A, asinserted,art 7, Sch 3 Part 1 (3) 3]

45.157 Grounds for the petition

The circumstances in which a partnership can be wound up as an unregistered company are:

1. where the partnership is dissolved, or ceases to carry on business, or is carrying on business only for the purposes of winding up its affairs; or
2. where the partnership is unable to pay its debts; or
3. where the court is of the opinion that it is just and equitable that the partnership shall be wound up.

Notes: [s221 (7) (M),art 7 Sch 3 Part 1 (3)]

45.158 Inability to pay debts - insolvent member

Where an insolvency practitioner is trustee or liquidator of a member, and he presents the petition and is able to satisfy the court that the insolvency order was made against the member because of that member’s inability to pay a joint debt, a partnership is considered to be unable to pay its debt unless it is proved otherwise.

Notes: [s221A, asinserted art 7,Sch 3 Part 1(3)]

45.159 Inability to pay debts - demand for payment

An insolvent partnership is also deemed unable to pay its debts if there is a creditor (by assignment or otherwise) to whom the partnership owes a sum greater than £750 then due and:

1. the creditor has served on the partnership a written demand in the prescribed form requiring payment; and
2. the partnership has failed to pay or secure the debt within three weeks of service.

Notes: [s222(M), art 7,Sch 3 Part 1(4)]

45.160 Service of the demand

Service of the demand is to be effected:

1. by leaving it at the principal place of business; or
2. by leaving it at a place of business at which business is carried on in the course of which the debt (or part of the debt) arose; or
3. by delivering it to an officer of the partnership; or
4. by otherwise serving it in such a manner as the court may approve or direct.

‘Officer’ is defined by article 2(1) Insolvent Partnerships Order as a member or a person who has control or management of the partnership business. It follows that the ‘officer’ does not need to be a partner.

Notes: [s222 (M),art 7,Sch 3 Part 1 (4)]

45.161 Inability to pay debts - debt remaining unsatisfied after action brought

A further test of deemed inability to pay debts which is specific to unregistered companies, and is modified by Schedule 3 of the Insolvent Partnerships Order, is where an action or other proceeding has been instituted against any member for any debt or demand due, or claimed to be due, from the partnership or from him in his character as member and

1. (notice in writing of the institution of the action or proceeding has been served on the partnership; and
2. the partnership has not within three weeks after service of the notice paid, secured, or compounded for the debt or demand, or procured the action to be stayed, or indemnified the defendant to his reasonable satisfaction against the action, costs, damages and expenses to be incurred by him because of it.

Notes: [s223 (M),art 7,Sch 3 (5)] Part 1 (5)]

45.162 Service

Service provisions for such notice are as detailed at paragraph 45.160 above.

 

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