Preliminary Sections

AuthorElspeth Berry/Rebecca Parry
Pages1-21
LAW OF

INSOLVENT PARTNERSHIPS AND LIMITED

LIABILITY

PARTNERSHIPS

LAW OF

INSOLVENT PARTNERSHIPS AND LIMITED

LIABILITY

PARTNERSHIPS

Elspeth Berry and Rebecca Parry

Wildy, Simmonds & Hill Publishing

© Elspeth Berry and Rebecca Parry, 2015

Contains public sector information licensed under the Open Government Licence v1.0

ISBN: 9780854901609

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

The right of Elspeth Berry and Rebecca Parry to be identified as the authors of this Work has been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the consent of the copyright owners, application for which should be addressed to the publisher. Such a written permission must also be obtained before any part of this publication is stored in a retrieval system of any nature.

This Work is published for general guidance only and is not intended as a substitute for professional advice. While every care has been taken in the preparation of the text, the publishers and authors can accept no responsibility for the consequences of any errors, however caused.

First published in 2015 by

Wildy, Simmonds & Hill Publishing
58 Carey Street

London WC2A 2JF
England
www.wildy.com

Typeset by Heather Jones, North Petherton, Somerset.

Printed in Great Britain by CPI Antony Rowe, Chippenham, Wiltshire.

Preface

The law of insolvency is notorious among practitioners and academics as an area of considerable legislative complexity, in part because many amendments have been made to the legislation over the years without a consolidating Act. The application of this law to partnerships and limited liability partnerships (LLPs) has added further complexity, with the legislative frameworks for both liquidation and bankruptcy being modified to the extent of providing entirely new procedures for partnerships, and the Insolvent Partnerships Order 1994 (IPO) and the Limited Liability Partnerships Regulations 2001 (LLP Regulations 2001) variously applying, disapplying and modifying the provisions of the Insolvency Act 1986 (IA 1986) (and the Companies Act 2006), which were originally drafted for companies and individuals. Moreover, these branches of insolvency law have hitherto been somewhat neglected so far as commentaries are concerned, with discussions of insolvency law as it applies to partnerships and LLPs being confined to chapters of more general texts on partnership or insolvency law.

This book aims to provide a detailed and comprehensive coverage of insolvency law as it applies to all three types of business partnership available under English law: general partnerships, limited partnerships and LLPs. It explains the legal framework applicable to insolvent partnerships and LLPs, starting with a detailed discussion of potential rescue procedures (compositions and arrangements, voluntary arrangements and administration), as well as the various types of receivership (including agricultural receiverships). It then explains and analyses the four possible partnership liquidation procedures (commenced either by creditors or partners, and with or without concurrent petitions against partners), the voluntary and compulsory liquidation of LLPs, and the joint bankruptcy procedure which is unique to general partnerships. Finally, it examines the possibilities for insolvency litigation and disqualification. It also includes tables summarising, for each of the insolvency procedures as they apply to partnerships and LLPs, which provisions of the IA 1986 are amended by the IPO or the LLP Regulations 2001, which are applied without amendment, and which are excluded. Reference is made to the relevant provisions of the Small Business, Enterprise and Employment Act 2015, although the timescale, and in particular the absence to date of the secondary legislation required to implement aspects of the latter for partnerships and LLPs, has necessarily restricted the discussion. It is also likely that the same secondary

vi Law of Insolvent Partnerships and Limited Liability Partnerships

legislation will be used to make the adjustments required to preserve the current procedures for concurrent partner bankruptcy, and for joint bankruptcy, when the reforms to debtor bankruptcy made by the Enterprise and Regulatory Reform Act 2013 come into force.

In the course of our research we have benefited from discussions with a number of lawyers, both practitioners and academics. While stressing that the views expressed in the book are our own, we wish to thank in particular Hamish Anderson of Norton Rose Fulbright and Professor Adrian Walters. Elspeth would also like to thank Mark Hodgson and Juliette Grant for their wisdom and support, and we would both like to thank Andrew Riddoch of Wildy, Simmonds and Hill for his encouragement and endless patience during the writing of this book.

We have endeavoured to state the law as it is known to us at 30 April 2015.

Elspeth Berry and Rebecca Parry

Contents

Preface v List of Abbreviations xxiii Table of Cases xxv Table of Statutes xxxvii Table of Statutory Instruments lxi Table of European Legislation lxxv

1 INTRODUCTION 1
1.1 Scope of the book 1
1.2 The different types of ‘partnership’ 2
1.2.1 General partnerships 2
1.2.2 Limited partnerships 3
1.2.3 LLPs 3
1.3 Scheme of the insolvency legislation 4
1.3.1 Partnerships 4
1.3.2 LLPs 7
1.4 Terms used in this book 8
1.4.1 Partners 8
1.4.2 LLP members 8
1.4.3 Designated members 9
1.4.4 Officers 9 Partnerships 9 LLPs 9

1.4.5 Directors 9
1.4.6 Contributories 10 Partnerships 10 LLPs 11

1.4.7 Connected persons 12
1.4.8 Associates 12
1.4.9 Shadow partners and members 14
1.4.10 De facto partners and LLP members 16
1.4.11 Company 18
1.4.12 Shares 18
1.4.13 Articles of association 18
1.4.14 Registration and the registrar of companies 19
1.4.15 Partnership property 19
1.5 Cross border insolvency proceedings 20

viii Law of Insolvent Partnerships and Limited Liability Partnerships

2 SCHEMES OF ARRANGEMENT 23
2.1 Legislation 24
2.2 Proposal 25
2.3 Application 27
2.4 Meetings hearing 28
2.4.1 Notice of the meeting 32
2.4.2 Approval 34
2.5 Sanction hearing 35
2.6 Reconstruction or amalgamation 38

3 VOLUNTARY ARRANGEMENTS 41
3.1 Ordinary partnerships: legislative framework 42
3.2 LLPs: legislative framework 43
3.3 Advantages of the voluntary arrangement 43
3.4 Moratorium 44
3.5 Process 44
3.5.1 Who proposes the voluntary arrangement? 47
3.5.2 Proposals 48
3.5.3 Background information 48
3.5.4 Assets and liabilities 49
3.5.5 Dividend payments 50
3.5.6 Guarantees 51
3.5.7 Duration 51
3.5.8 Fees and expenses 51
3.5.9 Composition or scheme of arrangement 52
3.5.10 Default 53
3.5.11 Effect of winding up 54
3.5.12 Completion 54
3.6 Insolvency practitioner involvement 55
3.6.1 Nominee’s scrutiny of the proposals 56
3.6.2 Court involvement 61
3.6.3 Calling of meetings 61
3.6.4 Procedure where the...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT