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Debt Article | Partnership Debt

Partnership Administration Order

A Partnership Administration Order is an option explored by partnerships where there is insolvency or the risk of it. It is typically considered where a business is low on funds and is going to be unable to pay its bills. A Partnership Administration Order can protect a business and keep it going despite it running out of the funds to meet its payments.

Generally, if you’re exploring the possibility of a Partnership Administration Order, you will do it with the services of an Insolvency Practitioner, who will guide you through the process.

The first step in the process is to apply to the court for the order, which effectively freezes the actions of your creditors, preventing them from taking any actions against you for the time being.

Partnership Debt | IVA

If successful, the order gives an individual the power to act as administrator for the Partnership, and affords the company protection from its creditors.

  • If the Order is to be granted, you need to be able to show that the Partnership fulfils one of three conditions:
  • a Partnership Voluntary Agreement is being proposed the business is continuing as a going concern
  • preferable realisation of the company assets are likely than would be during a winding up process.

A Partnership Voluntary Agreement is a proposal whereby you lay out plans for paying the debts owed to creditors over a period. This may be less appealing to them than receiving the payments as normal, but is certainly preferable to what they’ll receive if the business does indeed go under.

A Partnership Administration Order allows your Insolvency Practitioner to afford time and consideration into the process of handling the Partnership’s financial problems.

These orders are also generally beneficial to the creditors, as they are more likely to receive the debts owed to them if the Partnership manages to continue.