In much the same way as a Court can wind up a company it can also make a Winding Up Order against a partnership on the grounds that it is unable to pay it’s debts. There are 3 ways the court may conclude that a partnership is unable to pay its debts:
- Total liabilities exceed total assets in value.
- A statutory demand greater than £5000 remains unpaid for 21 days.
- The partnership is subject to an unsatisfied judgement execution.
Following the winding up order being made, the Official Receiver will take full control of the business and this will usually involve closing it down immediately.
A liquidator will often be appointed to realise the assets and distribute them to the creditors.