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A number of businesses trade as a partnership thus avoiding the formalities of a limited company. In fact, some professions are obliged to trade as partnerships and unfortunately recent times have seen a large increase in insolvency among certain professional disciplines.
Partnership encompasses small “husband and wife” trading concerns to large mult-national multi-partner practices.
Partnership Voluntary Arrangements (PVA)
Partnership voluntary arrangements follow similar guidelines to those for a Corporate Voluntary Arrangement. Again, recent changes have found that a PVA can be proposed out of Court, although the proposals must still be lodged at Court.
A proposal is made to the creditors of a partnership through an Insolvency Practitioner and if the required majority accepts the proposal, then the proposal is binding on all creditors. The result of the meeting of creditors is then reported to the Court and no creditor is then able to take any proceedings against the partnership without leave of the Court.
The Partnership Voluntary Arrangements are most appropriate when the Partnership wishes to continue and all the partners remain in situ.
Partnership Administration Orders
Partnership Administration Orders are virtually identical to Corporate Administration Orders, which are discussed under our heading of “Corporate Rescue”. (http://www.knightsandco.co.uk/index.asp?sid=32) However, they differ slightly with regard to certain legal formalities.
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