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The Partnership Act 1890 defines a partnership as, ‘… the relationship which subsists between persons carrying on business in common with a view to a proit.’ Partnership is based on a contractual relationship between the parties, but one that does not have to be evidenced in writing. A ‘partnership at will’, for example, is predicated upon the fact that people are working together in business, and behaving as partners.
They can also, however, be huge organisations, regulated by complex agreements (although even some larger partnerships may have little, if any, supporting documentation or formal agreement about how they work together).
Partnerships can also be between individuals and a company, or between one incorporated entity and another.
A Limited Liability Partnership (LLP) is a corporate business vehicle offering an alternative solution to traditional partnerships, granting limited liability to its members, but enabling them to organise the structure and tenor of their business in the same way as they would a partnership.
[See ‘Limited Liability Partnership’, ‘Partnership at Will’ and ‘LLP’.]
A partnership can apply for an Administration Order under Schedule B1 IA 1986 and Article 6 of the Insolvency Partnership Order 1994.
This is conducted in exactly the same way as the Administration of a company; in order to try and rescue the business, usually by continuing to trade and seeking a buyer of the business/assets.
Before and after the Administration there is a moratorium to protect the company/ partnership which will protect from action from partnership creditors (it does make it more likely that a creditor will pursue the partners, though).
It is worth noting that the Administration is unlikely to pay 100p in the pound to all creditors, and therefore the partners will still have joint and several liability
