Insolvency of general partnerships—priority of expenses and debts

Copyright © 2025 LexisNexis
Produced in partnership with Natasha Dzameh of St John's Chambers
Practice notes

Insolvency of general partnerships—priority of expenses and debts

Copyright © 2025 LexisNexis

Produced in partnership with Natasha Dzameh of St John's Chambers

Practice notes
imgtext

Applicable law

The pre-Insolvency Act 1986 (IA 1986) common law adopted a rule of convenience that in administering the estates of an insolvent partnership and its members, the debts of the firm ought to be paid out of the assets of the firm and the private debts of a member or members ought to be paid out of the assets of the member or members. In the event of a deficiency in either estate then it would be made good by any surplus in the other estate or estates (see Re Rudd & Son).

This Practice Note addresses the rules applicable to cases falling within the scope of the Insolvent Partnerships Order 1994 (IPO 1994), SI 1994/2421. For a discussion of what constitutes the assets of a General partnership, see Practice Note: The nature of a general partnership and its legal framework and News Analysis: Court finds property only an asset of partnership where agreed by partners (Wild v Wild and Others) .

The provisions in IA 1986, s 176A relating

Natasha Dzameh
Natasha Dzameh chambers

Barrister & Mediator, St John's Chambers

Natasha is a specialist commercial and chancery barrister who is consistently ranked as a leading junior in Chambers UK and Legal 500. She has been described as someone who has “a good way with clients” as well as being “an assertive and tenacious advocate”, “very responsive, extremely thorough, pragmatic and easy to work with as part of the team”, “approachable” and “extremely intelligent, with an eye for practical and innovative solutions”.
 
Natasha is often instructed as sole counsel in high value, multifaceted litigation. She has experience of acting as junior to senior counsel on particularly complex matters and working in teams of counsel on large scale, high value, document-heavy government disputes. Her clients range from individuals to major financial institutions and international companies including high street brands.
 
Natasha’s main areas of expertise are:
 
  • Commercial disputes – agricultural, banking and financial (including mis-selling and guarantees), classic cars, construction, equine, hire, insurance, IT and NHS contracts, restoration of historic documents, yachts and superyachts etc.
  • Insolvency – corporate and personal (including partnerships and insolvent estates)
  • Professional Negligence
  • Property Damage and Real Estate
  • Wills, Trusts and Probate – especially will construction, constructive trust and proprietary estoppel claims, estate administration, removal of personal representatives and trustees, inheritance disputes, undue influence and will validity challenges.
 
Natasha is particularly well-placed to assist on matters involving an overlap between her specialisms and she especially enjoys dealing with injunctions.
 
Natasha is an accredited mediator and has also been published in the Trusts and Estates Law & Tax Journal several times.

Read moreRead more
Powered by Lexis+®
Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Insolvency definition
What does Insolvency mean?

This can be defined by two alternative tests (Insolvency Act 1986, s 123):

• cash flow test: a company is solvent if it can pay its debts as they fall due, no matter what the state of its balance sheet (Re Patrick & Lyon Ltd [1933] Ch 786);

• balance sheet test: a company which can pay its debts as they fall due may be insolvent if, according to its balance sheet, liabilities (including contingent liabilities) exceed assets.

Read more readmore

Popular documents

What is the difference between an appeal and a review?

What is the difference between an appeal and a review?What is an appeal?An appeal in insolvency proceedings is no different to an appeal in normal litigation. An appeal will be allowed only if the appeal court is satisfied that the decision of the lower court was 'wrong' or 'unjust because of a

If a rentcharge is shown as being informally exonerated on title information, does this apply to the

If a rentcharge is shown as being informally exonerated on title information, does this apply to the current registered owner? Or does the informal exoneration only apply to the parties to the document which informally exonerated the rentcharge?This Q&A considers the situation where, at some

Late payment penalties—inheritance tax

Late payment penalties—inheritance taxWhile interest often accrues on overdue tax, the late payment of certain taxes may also attract a penalty. For information on the interest accruing on overdue tax, see Practice Notes: IHT—payment deadlines on death—Interest on IHT and Interest on late paid

Glossary—Latin legal terms

Glossary—Latin legal termsDespite attempts in recent years to simplify the language used in legal cases, there are still a number of Latin phrases commonly used in personal injury claims. The following Latin phrases are listed in alphabetical order:Latin