Partnership Voluntary Arrangement
What is a Partnership Administration Order?
The Partnership Voluntary Arrangement (PVA) was introduced with the Insolvent Partnership Order 1994. The PVA process is virtually identical to that of the more common Company Voluntary Arrangement (CVA), although it will be the partnership members who will be responsible for drafting the PVA proposals, whereas in a CVA this task falls to the directors.
When is a PVA used?
A PVA should only be proposed and agreed where it operates a viable business. The exception would be when there are valuable and readily saleable assets, which could generate cash to pay down debts or provide short term cash flow while the business is either sold or restructured.
Unlike an Individual Voluntary Agreement (IVA), a PVA does not provide the partnership with protection, so enforcement action can continue in the period before the creditors meeting that must be called to approve the PVA. Where partners have personal assets and liabilities both personally and jointly and severally for the partnership’s liabilities, they may each have to enter into IVAs, which will run concurrently with the PVA.