September 1997

45.163 Modifications to the Act

Where there are concurrent petition(s) presented by the petitioner against the partner(s) in their capacity as member(s), Part V of the Insolvency Act 1986 is applied (subject to modifications) by article 8 of the Insolvent Partnerships Order (other than s223 and s224) to the winding up of an insolvent partnership as an unregistered company on a creditor’s petition.

Because article 8 envisages concurrent petitions against both corporate and individual members, other parts of the Insolvency Act are also applied subject to modification.

45.164 Former members

All the provisions of article 8 are further modified, so that reference to members also includes former members against whom an insolvency petition is being or has been presented by virtue of article 8.

45.165 Jurisdiction

Section 117, relating to court jurisdiction, is modified by article 8 of the Insolvent Partnerships Order in the same way as article 7 (paragraph 45.155) but in addition the court has jurisdiction to wind up a corporate member or make a bankruptcy order against an individual member of a partnership of which a petition has been presented where it has jurisdiction to wind up the partnership, subject to the following paragraph.

Notes: [s117(5) (M),art 8,Sch 4(5)]

45.166 Petitions to be in same court

Any application to court by virtue of article 8 for the winding up of a partnership as an unregistered company and the liquidation or bankruptcy of one or more members shall be presented to the same court and, unless the court otherwise directs, on the same day and except in the case of a petition against an individual member must be advertised.

Notes: [s124(M), art 8,Sch 4 (8)]

45.167 Additional partners

At any time after the presentation of the petition, the petitioner, with leave of court, may add other members or former members as parties to the proceedings in relation to the insolvent partnership.

Notes: [s124 (4) (M),art 8, Sch 4(8)]

45.168 Winding up as an unregistered company - grounds

Section 221 is modified by article 8 of the Insolvent Partnerships Order in the same way as article 7 detailed above (paragraph 45.155) except that the only ground that the partnership can be wound up under article 8 is that it is unable to pay its debts (and not the other two grounds set out in paragraph 45.157).

45.169 Inability to pay debts

For the purposes of the modified s221, an insolvent partnership is deemed unable to pay its debts if there is a creditor (by assignment or otherwise) to whom the partnership is indebted for £750 or more then due, and

1. the creditor has served (in the manner specified at paragraph 45.170) on the partnership a written demand in the prescribed form for payment of the sum due,
2. the creditor has also served on any one or more members of the partnership liable to pay the sum due (in the case of a corporate member by leaving it at its registered office, and in the case of an individual member by serving it in accordance with the rules (paragraphs 45.95 - 45.100)) a demand in the prescribed form requiring the member(s) to pay the sum due, and
3. the partnership and its members, within 3 weeks of the last of them to be served, have failed to pay the sum or to secure or compound it to the creditor’s satisfaction.

Notes: [s222 (M), art 8,Sch 4 (4)]

45.170 Service of the demand on the partnership

Service of the demand on the partnership shall be effected -

1. by leaving it at the principal place of business of the partnership in England and Wales, 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) arise,
3. by delivering it to an officer of the partnership, or
4. by otherwise serving in such a manner as the court may approve or direct.

‘Officer’ is as noted at paragraph 45.160.

Notes: [s222 (M), art 8,Sch 4 (4)]

45.171 Circumstances in which members may be wound up or made bankrupt

A corporate member may be wound up by the court if it is unable to pay its debts (the six other grounds in s122 are excluded). Where a petition for the winding up of the partnership has been presented under article 8, a creditor’s petition against an individual member must be in respect of one or more joint debts owed by the insolvent partnership and the petitioning creditor or each of them must be a person to whom the debt or at least one of the debts is owed. A creditor’s petition may be presented in respect of a joint debt or debts only if, at the time the petition is presented,

1. the total debt(s) is equal to or exceeds the bankruptcy level (presently £750),
2. the debt(s) is for a liquidated sum payable to the petitioning creditor (or one or more of them) immediately and is unsecured,
3. the member is liable for the debt(s) and appears unable to pay, and
4. here is no outstanding application to set aside the statutory demand served in respect of the debt or any of them.

Notes: [s122 (M),s267 (M), art 8,Sch 4(6)]

45.172 Inability to pay debts - corporate member

A corporate member is deemed unable to pay his debts if there is a creditor (by assignment or otherwise) of the partnership owed more than £750 then due for which the member is liable and

1. the creditor has served on that member and on the partnership a written demand, in the prescribed form, requiring payment of the sum due, and
2. the corporate member and the partnership have not paid, secured or compounded for the debt within 3 weeks of service of the demand.

Service of the demand on the corporate member is by leaving at the registered office. Service on the partnership is as described at paragraph 45.170.

Notes: [s123 (M), art 8,Sch 4(7)]

45.173 - individual member

An individual member appears unable to pay a joint debt for which he is liable if the debt is payable immediately and the petitioning creditor has served -

1. on the individual member a statutory demand in the prescribed form and in accordance with the rules, and
2. on the partnership, a written demand in the same form,

requiring payment by the individual and the partnership and the debt has neither been paid, secured for or compounded nor the demand against the member set aside within 3 weeks of the latest service. Service of the statutory demand on the partnership is as described at paragraph 45.170. Service of the statutory demand on the individual member is in accordance with the rules (paragraphs 45.95 - 45.100).

Notes: [s268(M)art 8, Sch 4(7)]

45.174 Details to be in the petition

Forms for the appropriate petition to be presented against the partnership and its members are contained in Schedule 9 of the Insolvent Partnerships Order. Each petition should contain particulars of other petitions being presented in relation to the partnership, identifying the partnership and the members concerned.

Notes: [s124(M), art 8,Sch 4(8)]

45.175 Progress report

On the day of the hearing of the petition against the partnership the petitioner is required to complete and hand to the court a progress report in form 9 giving details of the current position of the various petitions being presented.

Notes: [s124(7) (M),art 8, Sch 4(8)]

45.176 Withdrawal of petition

A petitioner may withdraw his petition if -

1. he withdraws all other petitions which he has presented by virtue of article 8 and
2. he gives at least 3 days notice prior to the hearing of his intention to the court.

Subsection (a) above does not apply if the petitioner convinces the court on application that because of problems with serving the petition against an insolvent member the continuance of that petition would be likely to cause prejudice or delay to the proceedings on the other petitions which he has presented.

Notes: [s124(M),art 8,Sch 4(8)]

45.177 Substitution of petitioner and change of carriage

Where notice of withdrawal is given the court may, subject to such terms as it thinks fit, substitute as petitioner in respect of both the partnership and the members’ petitions any creditor who would have the right to present the petitions. If this occurs the petitions will not be withdrawn. This provision includes a change of carriage of the petition.

Notes: [s124(M), art 8,Sch 4(8)]

45.178 Attendance at the hearing

Any member of the partnership (whether or not a petition has been presented against them) may attend and be heard on the petition for the winding up of the partnership.

Notes: [s124(M), art 8,Sch 4(8)]

45.179 Timing of the hearings

The hearing of the petition against the partnership must be in advance of the hearing of any petition against an insolvent member.

Notes: [s124(M),art 8,Sch 4(8)]

45.180 Powers of the court

Subject to the following paragraph, on hearing a petition against an insolvent partnership or any of its members, the court may dismiss it or adjourn the hearing conditionally or unconditionally or make any other order that it thinks fit. An order in respect of an insolvent partnership may contain directions as to the future conduct of any insolvency proceedings existing against any insolvent member.

Notes: [s125(M),art 8,Sch 4(9)]

45.181 Hearing of the petitions against members

On hearing the petitions against the members, the petitioner must draw the court’s attention to the outcome of the hearing of the winding up petition against the partnership.

Notes: [s125A, art 8,Sch 4(9)]

45.182 - Where no winding up order against partnership

Where there has been no winding up order made against the partnership, but the petition has not been dismissed, the court may adjourn the hearings against the insolvent members until either event has occurred.

45.183 - Where partnership wound up

Where a winding up order was made against the partnership, the court may make insolvency orders against the members, but where this does not happen within 28 days of the order against the partnership, the winding up of the partnership must be conducted as if no concurrent petitions had been presented (ie under article 7 as detailed above) and the proceedings against the members must be conducted under the Insolvency Act 1986 with no modifications (other than those made to S168 and S303 by article 14).

45.184 - Where petition against partnership dismissed

Where the petition against the partnership was dismissed, the court may dismiss the petitions against the members. Where, however, the court does make an order against a member, the insolvency shall be conducted in accordance with the unmodified Insolvency Act 1986 (other than those made to S168 and S303 by article 14).

45.185 Dismissal of petition against member

The court may dismiss a petition against any insolvent member if it considers

it just to do so, because of circumstances having changed since the making of the winding-up order against the partnership. This provision is intended to deal with the situation where the debt on which the winding-up petition had been based has been paid in full prior to the hearing of the bankruptcy petitions. The court may dismiss a petition against any insolvent member who is a limited partner if -

1. the member lodges in court sufficient money or security to meet his liability for the debts; or
2. the member satisfies the court that he is no longer under any liability in respect of the debts and obligations of the partnership.

Notes:  [s125AArt 8, Sch 4(9)]

 

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