Partnership Voluntary Arrangement (PVA)
It is important that a PVA is only used where a partnership’s business is viable, or where it has disposable assets. A PVA is a powerful tool (similar to a CVA) for the restructuring of a business. However, each partner (unlike Ltd company directors) has an individual personal liability for all the creditors of the partnership. This is “joint and several” liability and a partnership creditor can sue a partner in his individual capacity.
To manage this problem of joint and several liability an individual partner can also propose an Individual Voluntary Arrangement (IVA), either alone or by having an “interlocking” IVA with the other partners.
NOTE: A Partnership Administration Order and the protection that offers can be granted by a court provided it is satisfied that the order would achieve one of the following.
- The acceptance of a PVA, under which the partnership debts are
- The continuance of the partnership as a going concern
- A greater realisation of the partnership assets than would occur
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