The Insolvent Partnerships Order 1994 (IPO1994) provides under Part II for a voluntary arrangement of an insolvent partnership (article 4) and for voluntary arrangements of members of an insolvent partnership (article 5). Both corporate and individual members of a partnership may enter into voluntary arrangements. Where a partnership voluntary arrangement (PVA) is proposed it may be necessary to propose IVAs for the partners to run concurrently with the PVA.
Note: [IPO1994] [The Insolvent Partnerships (Amendment) (No.2) Order 2002 SI 2002/2708]
Article 4(1) of IPO1994 provides that the voluntary arrangement provisions contained in the IA86 - Part I, and Schedule A1 apply to insolvent partnerships, with certain modifications. These are set out in the IPO1994, Schedule 1 as substituted by the Insolvent Partnerships (Amendment) (No 2) Order 2002. The arrangement should provide for both partnership creditors and for the creditors of the individual/corporate members of the partnership.
Part 1 of the IA86 (Company voluntary arrangements) is applied to corporate members and Part VIII of the IA86 (Individual Voluntary Arrangement) is applied to individual members of a partnership with the modification mentioned in Article 5(1). (See Chapter 53 - Partnerships).
Note: [IPO1994, Parts I and VIII, Article 5]
Where winding-up orders or bankruptcy orders are made against a partnership or its members subject to a voluntary arrangement the official receiver will need to look carefully at all previous voluntary arrangements to determine whether the winding-up/bankruptcy order has the effect of terminating the arrangement and consequently whether assets held by the supervisor are available to the official receiver as trustee or liquidator (and, if they are, the extent to which they are subject to prior charges).Further details of how to deal with voluntary arrangements are at paragraphs 20.06 and 20.07 (winding up) and 20.18 to 20.20 (bankruptcy).