Introduction
| Author | Elspeth Berry/Rebecca Parry |
| Pages | 1-21 |
Chapter 1
Introduction
1.1 SCOPE OF THE BOOK
This book provides a detailed account of the law of insolvency as it applies to three types of business organisation: general partnerships, limited partnerships (collectively referred to as partnerships in this book unless otherwise noted) and limited liability partnerships (LLPs).
In the UK there are approximately half a million general partnerships, an ever increasing number of LLPs made up largely of professional practices, and a small number of limited partnerships playing a particularly significant role in the private equity market and also in family and farming enterprises. Despite the economic importance of these forms of businesses, relatively little has been written on the application to them of the insolvency legislation.
Maxwell, 19th edn, 2010), Ch 27; M Blackett-Ord and S Haren, Partnership Law (Bloomsbury Professional, 4th edn, 2011), Chs 22–23; J Whittaker and J Machell, The Law of Limited Liability Partnerships (Bloomsbury Professional, 3rd edn, 2009), Chs 28–35; G Morse, Partnership Law (Oxford University Press, 7th edn, 2010), Ch 8.
Principles of Corporate Insolvency Law (Sweet & Maxwell, 4th edn, 2011); E Bailey and H Groves, Corporate Insolvency: Law and Practice (Butterworths, 4th edn, 2014); I Fletcher, G Lightman and GS Moss (eds), Lightman & Moss: The Law of Administrators and Receivers of Companies (Sweet & Maxwell, 5th edn, 2011); IF Fletcher, The Law of Insolvency (Sweet & Maxwell, 4th edn, 2014); P Totty, G Moss and N Segal (eds), Insolvency (Sweet & Maxwell, looseleaf); I Fletcher, P Davies, M Bridge and D Bennett (eds), Palmer’s Corporate Insolvency (Sweet & Maxwell, looseleaf); AR Keay and P Walton, Insolvency Law: Corporate and Personal (Jordan Publishing, 3rd edn, 2012); H Rajak, Corporate Rescue and Liquidation (Sweet & Maxwell, 3rd edn, 2013). There have been texts devoted to particular insolvency procedures, including AR Keay, McPherson’s Law of Company Liquidation (Sweet & Maxwell,
2 Law of Insolvent Partnerships and Limited Liability Partnerships
However, even a cursory reading of the relevant legislation or such brief literature as there is gives a clue as to the reason. Bolted on to the underlying company and individual insolvency legislation, which itself is often neither clear nor concise, are pieces of secondary legislation which apply selected parts of the insolvency legislation to partnerships or LLPs, often with modifications. Even with careful reading and constant cross-referencing, it is evident that not all aspects of the various company and individual insolvency procedures and concepts have been fully transposed into the partnership and LLP legislation, with the result that the legislative framework for the three types of partnership is difficult to comprehend, and especially so in relation to general and limited partnerships.
1.2 THE DIFFERENT TYPES OF ‘PARTNERSHIP’
In order to understand the way in which insolvency legislation applies to each, it is necessary firstly to explain briefly their key features.
1.2.1 General partnerships
A general partnership is defined in section 1 of the Partnership Act 1890 (Partnership Act) as ‘the relation which subsists between persons carrying on a business in common with a view of profit’. Thus the fundamental requirements for such a business from a legal perspective are that there must be a minimum of two persons (who may be natural or legal persons), they must be carrying on a joint enterprise,
3rd edn, 2013); GM Weisgard and M Griffiths, Company Voluntary Arrangements and Administration (Jordan Publishing, 3rd edn, 2013); P Loose and M Griffiths, Loose & Griffiths on Liquidators (Jordan Publishing, 8th edn, 2014). There have been theoretical analyses, including D Milman, Governance of Distressed Firms: Corporations, Globalisation and the Law (Edward Elgar, 2013); V Finch, Corporate Insolvency Law: Perspectives and Principles (Cambridge University Press, 2nd edn, 2009); RJ Mokal, Corporate Insolvency Law: Theory and Application (Oxford University Press, 2005). More recent years have seen some good comparative works, e.g. R Bork, Rescuing Companies in England and Germany (Oxford University Press, 2005); G McCormack, Corporate Rescue Law: An Anglo-American Perspective (Edward Elgar, 2008); C Mallon and S Waisman (eds), The Law and Practice of Restructuring in the UK and US (Oxford University Press, 2011).
noting that partnership disputes frequently centre on whether a partnership exists at all or the date of its commencement.
A general partnership in England and Wales has no legal personality separate to its partners,
1.2.2 Limited partnerships
A limited partnership is a variation on the general partnership. Like a general partnership, a limited partnership must comply with the definition in section 1 of the Partnership Act, has no legal personality
to which his liability is limited
1.2.3 LLPs
An LLP is rather different and combines features of both partnerships and private limited companies. The key pieces of governing legislation are the Limited Liability Partnerships Act 2000 (the LLP Act), the Limited Liability Partnerships Regulations 2001
4 Law of Insolvent Partnerships and Limited Liability Partnerships
Liability Partnerships (Application of Companies Act 2006) Regulations 2009
(the LLP Regulations 2009). Certain of the provisions of the LLP Act and the LLP Regulations 2001 are based on partnership law; but many of the other provisions as well as the whole of the LLP Regulations 2009 and a number of other Regulations,
Like a limited partnership, an LLP must also be registered with the registrar of companies and it comes into existence on that date.
1.3 SCHEME OF THE INSOLVENCY LEGISLATION
1.3.1 Partnerships
In relation to general and limited partnerships, the Partnership Act envisages that a loss-making partnership will be dissolved,
Act 2006) Regulations 2008 (SI 2008/1911); the Small Limited Liability Partnerships (Accounts) Regulations 2008 (SI 2008/1912); the Large and Medium-sized Limited Liability Partnerships (Accounts) Regulations 2008 (SI 2008/1913); and the Companies and Limited Liability Partnerships (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012 (SI 2012/2301).
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