Partnership Administration Order
A PVO is similar to an Administration for a Limited Company.
A PVO application can be made if the partnership is insolvent and has carried on business in England or Wales within the past three years.
The purpose is to protect the partnership whilst a restructure, refinance or sale is considered.
A Statement of Affairs for the Partnership must be prepared and the partners can then apply to court for an order. It is usual for an interim order to be granted to prevent creditors taking any action against the partnership whilst the court considers matters.
At the hearing the court considers the application and whether it should allow the court to grant powers to the Administrator to run the partnership affairs.
The order would only be granted if one of the following three options is being pursued:-
• The proposal of a partnership voluntary arrangement
• Survival of all or part of the business as a going concern
• A more orderly realisation of assets than may happen in winding up
Should the court make the order, creditors actions against the partnership are then frozen, and creditors cannot take action against the company without the permission of the Court or the Administrator.
The Insolvency Practitioner will then manage the business in meet the purpose of the Administration.
The disadvantages of the PVA are:
• It is costly
• The administration is a public process
• There must be sufficient cash available to trade the partnership through the Administration process
The advantages are:
• It avoids a winding up
• Survival of the business
• A Better return to creditors