What happens if an LLP falls into debt?

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Afternoon

We’re going to put together an LLP in Dundee; however, first we need to know what will happen should our partnership fall into debt. Does anyone on here know how it works?

Thanks a million

Answers

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A limited liability partnership is recognised as a legal individual so the business itself is responsible for its own debts. The individual members of an LLP enjoy limited liability, so your personal contribution to business debts will be no more that what you invest in the LLP and guarantee to pay toward debts.

However, Worse still, there is a specific "clawback" provision in section 214A of the Insolvency Act which applies only to LLPs. Members can be asked by a liquidator to repay drawings or other payments received from the LLP during the two year period prior to the insolvent liquidation of the LLP if such members knew, had reasonable grounds for believing, or ought to have known, that the LLP was unable to pay its debts at the time the monies were paid.

a year ago
 

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