The fundamental thing to understand is that, whilst they may be run in a way very similar to “old-style” partnerships (which have no legal identity separate from that of the various people making up the partnership – the partners), legally speaking limited liability partnerships (“LLPs”) are more similar to limited companies. LLPs exist as a separate legal “person” – independently from the existence of the partners/members.
The correct procedure for bringing to an end the activity/existence of an LLP is therefore winding up/liquidation in accordance with the provisions of the Companies Act 2006 (as modified by the Limited Liability Partnership Regulations 2001 so as to apply to LLPs) rather than – as sometimes thought – by a Deed of Dissolution.
That said the end result can be the same – with specified parts or all of the business of the LLP being sold to a NewCo just prior to liquidation – but the formal Companies Act procedure has to be gone through. Whether this is a “solvent winding up” (referred to as a members’ voluntary liquidation – MVL) or an “insolvent winding up” (referred to as a creditors’ voluntary liquidation – CVL) will depend on the views of the members as to whether all debts of the LLP will be paid (and their willingness to make a Statutory Declaration to that effect).
Either way however the initial stage of the process is the passing of a resolution to wind up the LLP and the appointment of a Liquidator to deal with the process.
The Property & Commercial Department at Barrett & Co have established contacts with experienced insolvency practitioners both locally and further afield (sometimes directors/partners do not want liquidation dealt with by someone from their own “back yard”). It would generally be recommended to get an experienced insolvency practitioner involved as early as possible in the process. We can then work together to ensure that the process runs smoothly and that undesired consequences are avoided.
Get in Touch
Please contact the department on 0118 958 9711 and ask for the Property & Commercial Department for advice.