Limited partnerships and insolvency—key principles

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

Limited partnerships and insolvency—key principles

Copyright © 2025 LexisNexis

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

Practice notes
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Applicable legislation

Limited partnerships are created under the Limited Partnerships Act 1907 (LPA 1907). The provisions of the Partnership Act 1890 (PA 1890) together with the rules of equity and common law applicable to partnerships also apply to limited partnerships, subject to the provisions of LPA 1907.

A limited partnership, like a general partnership, is not a separate legal entity (Re Barnard, Martins Bank v Trustee).

For the most part, limited partnerships are subjected to the same law of insolvency as is applied to insolvent general partnerships and the Insolvent Partnerships Order 1994 (IPO 1994), SI 1994/2421 treats general partnerships and limited partnerships in the same way for insolvency purposes.

There are a number of modifications contained in the IPO 1994 unique to limited partnerships. These derive from the fact that while a general partner, for insolvency purposes, is subject to the same rules as a general partner in an ordinary partnership, modified rules apply to the limited partner due to their having limited liability.

Importantly for limited partnerships, The Insolvency

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.

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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.

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