What is a Partnership Administration Order?
The Partnership Administration Order procedure is available for insolvent partnerships, which have been trading for at least three years.
Although Partnership Administration is similar in a number of ways to Administration and Administrative Receivership for a limited company, it remains a standalone procedure.
A Partnership Administration Order is obtained through an application to Court, which must be convinced that the partnership cannot pay its debts and where one of the following events would be achieved:
- The continued trading of the partnership as a going concern
- A Partnership Voluntary Arrangement (PVA) can be agreed with the creditors to restructure debts
- A better return for creditors than liquidation
A petition for a Partnership Administration Order can be presented to the Court by the members of the partnership, its creditors or the Supervisor of a Partnership Voluntary Arrangement.
What happens when a Partnership goes into Administration?
The Administrator appointed by the Court takes control of the affairs of the business. Enforcement action by creditors is frozen and no new action can be taken without the permission of the Court or the Administrator.
The Administrator works with the partnership on an agreed plan for continuation of the business, or a pre-pack sale to maximise recovery for the creditors. As with an Administration of a limited company, the Administrator has a statutory duty to act in the best interests of the creditors as a whole and cannot favour one or some of the creditors over the others.