The law relating to the winding up of insolvent partnerships and the winding up/bankruptcy of their members is contained in the Insolvent Partnerships Order 1994 ("IPO") which adapts the provisions of the Insolvency Act 1986 to the special circumstances of partnership cases.
Separate estate statements of affairs are to show the position at the date of the appropriate winding-up or bankruptcy order against the partner (corporate or individual), while the partnership statement of affairs should show the position at the date of the winding-up order against the partnership. In the event that the dates of such bankruptcy orders are different, the partnership statement of affairs should be made up as at the date of the earliest order against a partner.
Where proceedings are brought under article 7 of IPO against a partnership alone, the partnership is treated as being an unregistered company under Part V of the Act [Note 1]. The form of statement of affairs required is that used in winding up proceedings. The title to page C of Form SAWU should, however, be amended to read "Partners", with columns 2 and 3 showing their names and addresses. Column 4 should show the respective profit-sharing ratios. Columns 5-8 can be left blank. The partners have the same duties in relation to the submission of a statement of affairs as would normally apply to company directors.
The procedure for obtaining a statement of affairs is the same as applies in a winding up by the court (see Parts 1 and 2 of this chapter). Only one partner need lodge the statement of affairs, with the other partners being asked, if thought necessary, to lodge a statement of concurrence verified by a statement of truth (see paragraphs 12.33-12.35).
Where a winding-up petition is presented by a creditor against a partnership and also a winding-up order is made against a corporate partner and/or a bankruptcy order is made against an individual partner, the partners are required to submit with the separate estate statement of affairs, form SAPS [Note 2].
This comprises the following parts of the statement of affairs :
List D - where the insolvent is a member of an insolvent partnership, this supplements the insolvent’s own statement of affairs
List E - where the insolvent is a member of an insolvent partnership, this supplements the insolvent’s own statement of affairs)
Guidance Notes (Company or insolvent a member of partnership)
The partnership estate statement of affairs should be in form SAWU and should contain complete details of the assets and liabilities of the partnership with no reference being made to the separate assets or liabilities of the partners, except a note as regards assets that any surplus on a partner’s separate estate may be applied to meeting his/her contribution to the partnership’s deficiency.
Separate estate statements of affairs need not duplicate all the information contained in the partnership statement but should contain a note that the insolvent is jointly and severally liable with the other partners for the deficiency shown in the partnership statement of affairs. A copy of the relevant pages of the partnership statement of affairs (i.e. those showing the partnership assets and liabilities) should be included as an annex to the separate estate statement of affairs. The separate estate statement of affairs should also contain a note to indicate that any surplus on the partnership estate from the partnership’s own assets, after payment of all partnership creditors, will be divisible amongst the partners’ separate estates, including the bankrupt’s, either:-
See also paragraph 12.90.
If all the members of an insolvent partnership are individuals, they can jointly present a petition for each of them to be declared bankrupt and for the partnership business to be wound up and its property administered, without also having to apply for the partnership to be wound up as an unregistered company [Note 4] (see paragraph 53.44 for further details).
The members of the partnership, when presenting the petition, will also file in court:
The statement of affairs should contain :