Winding up a Limited Liability Partnership
Introduced by the LLP Act 2000, Limited Liability Partnerships work in much the same way as a traditional partnership, while offering a ‘limited liability’ to each partner.
But what does this mean when the LLP receives a Winding up Petition, a letter petitioning the court to compulsorily liquidate the partnership? As the most serious creditor threat available, the majority of winding up petitions in the UK are issued by HMRC. Once this letter arrives, you have just seven days before the court hearing to take meaningful action.
I’m a Member of an LLP and Have Received a Winding up Petition, What Should I do?
A Winding up Petition is the final demand letter available to a creditor, giving you just 7 days to act before a judge rules upon whether to make the petition into an Order, meaning the LLC will be liquidated, and it’s name struck off the Companies House register.
- If you can pay the debt, do so immediately. Winding up Petitions are advertised in the Gazette, the official journal of public record. Once the banks see the Winding up Advertisement your corporate bank accounts will be frozen, serious jeopardising your ability to carry on running the business.
- Contact us for a free consultation. Swift and decisive action is the only chance you have with a Winding up Petition to stave of compulsory liquidation. Call one of our advisors to find out your options, and whether there’s a legitimate chance to stop the petition in its tracks.
- Do Not Put Your Head in the Sand – We have seen many people lose their companies, over the years, by failing to tackle a Winding up Petition head on. From the moment the letter is issued the clock is ticking, with the ability to find a solution heavily dependent on what time remains. This is not a creditor threat which can be ignored, so you have to act.
If Our LLP Can’t Pay the Debt, What are our Alternatives?
Several alternatives to compulsory liquidation may be available, depending on the particular situation of your Limited Liability Partnership. They might include:
As a Member of an LLP, Can I be Held Personally Liable for Debts?
While the corporate protection inherent in the LLP structure does give you limited liability, partner behaviour will be investigated, as part of any insolvency. The key thing insolvency practitioners will be looking for is whether, once the insolvency was realised, that creditors interests were put first. Where this is demonstrably not the case, and partners within an LLP have prioritised their own interests after the point of insolvency, charges of wrongful or fraudulent trading may be bought. If these are proven, partners may be held personally liable for some or all of the LLP’s debt.