The Business Debt Advisor

Partnership Administration Order - Process

 
The partners and the holder of an agricultural charge can apply for an "out of court" appointment of an administrator. If creditors wish to apply their application must be made to the court in the form of a "Notice to appoint an administrator" . This route also applies where the partnership has a petition to wind up the business pending.

THE EFFECT

An interim moratorium is established immediately the papers are filed in court. Creditors cannot take steps to enforce security, repossess goods, landlord's cannot exercise a right of forfeiture and any other legal process cannot be instituted or continued except with permission of the court. This means that the partnership's position is protected.

In the case of an "out of court" appointment, the protection described above is automatic on lodging the appointment papers in court.

NEXT STEPS

The administrator is obliged to publicise his/her appointment. The powers of the partners cease, except as authorised, by the Administrator.

The Administrator, with the co-operation of the partners, must prepare proposals on how the purpose of the Administration is to be achieved and within 10 weeks of appointment convene a meeting of creditors to consider those proposals. This is not necessary if all creditors are to be paid in full or there is no prospect of a return to creditors.

The Administrator must submit 6 monthly progress reports to creditors.

As in certain other insolvency procedures, the Administrator has a responsibility to investigate the partners' conduct and a report has to be submitted to the Department of Trade and Industry within 6 months of the date of administration.

The Administrator has wide powers and duties which must be exercised to achieve the purpose of the administration as quickly and efficiently as reasonable possible.

THE CONCLUSION

The procedure for ending the administration must be stated in the proposals presented to creditors. This could include a partnership voluntary arrangement, liquidation or by automatic termination of the administration after 12 months.

The correct termination procedure to be used will depend on the purpose of the Administration. For example:-

• Saving the business - The partnership can be returned to the control of the partners via a partnership Voluntary Arrangement.

• A better return to unsecured creditors than in a liquidation - the Administrator could apply to court for permission to make a distribution to unsecured creditors, distribute funds and the Administration will then automatically end within 12 months.

 

The Next Step

The options for a financially distressed business need to be very carefully considered. Simply forward your details on our Contact Form and we will contact you. Alternatively ring us on our FREE ADVICE LINE 0800 781 0990.