- No waiver of debt owed by LLP member (Re A&C Restoration LLP)
- What are the practical implications of this case?
- What was the background?
- What did the court decide?
- Case details
Restructuring & Insolvency analysis: Insolvency and Companies Court Judge Jones held that a former member of a limited liability partnership (LLP) was liable to the LLP for a debt, notwithstanding the existence of a deed of waiver (the deed).While it was theoretically possible for an LLP to waive its claim against a member under the terms of the deed, the fact that the deed had been entered into in breach of the member’s duty to consider the interests of creditors gave rise to an estoppel. The effect of the decision was that the member was liable to pay a debt and, in the alternative, to pay damages for breach of duty. The court also held that an alleged oral agreement was not an agreement with the LLP, but at most could have given rise to an indemnity for that liability from a co-member. It did not affect the position of the LLP. ICC Judge Jones consequently did not need to consider the alternative claims for transaction at undervalue or for the adjustment of withdrawals under section 214A of the Insolvency Act 1986 (IA 1986). Written by Samuel Parsons, barrister, at Guildhall Chambers.
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