A partnership is an unregistered business structure, which has a deed of partnership in place. The deed specifies the type of partnership, how much capital each party has contributed and how profits and losses are shared. A partnership doesn’t have a separate legal identity from its partners, which means that the individual partners are personally liable for the firm’s debts. Partners, in a similar vein, to sole traders, run the risk of unlimited liability and may be forced to sell personal assets to cover their business debts.
Creditors that are owed money by a partnership have three options they can pursue. Firstly, they can petition to have the partnership wound up while no legal action is taken against the individual partners. Secondly, they can petition to wind up the partnership as well as filing individual bankruptcy petitions against one or more partners. Thirdly, they can serve individual bankruptcy petitions against one or more partners without issuing a winding up petition to close the partnership itself.
If the creditor chooses the second option, to wind up a partnership as well as making the partners bankrupt, the Court will deal with the winding up petition first before the individual bankruptcies. To serve an individual bankruptcy petition, the Creditor must be owed £5,000 or more. If a bankruptcy order is granted, the debtor’s assets will be sold and distributed fairly amongst the creditors.
Similarly to partnerships, this type of business structure doesn’t have a separate legal existence from its owner, which means he or she is personally liable for the firm’s debts. Sole traders also run the risk of unlimited liability, which could see them sell personal assets to cover any business debts. In short, anything and everything are on the line. To present a bankruptcy petition against the sole trader to Court, a creditor must be owed £5,000 or more.
If you are owed £750 or more and would like to know more about serving a winding up petition against a company or partnership that owes you money, please call 08000 746 757 or email [email protected] for free and confidential advice from one of our professional advisers.