In the words of Lao Tzu: “If you do not change direction, you may end up where you are heading”. Voluntary Administration (VA) is a process that can be used as you attempt to rescue your business that might be experiencing financial difficulty. The main goal would be to avert liquidation.
The limited partnership (LP) structure can be quite complex in that it has both attributes of a company and a general partnership structure. An LP structure is made up of general partners, who are liable for all the debts and liabilities of the partnership, and limited partners, who would only be liable to the extent of their capital contribution to the partnership.
To date, the LP structure has not been the subject of many VAs in New Zealand. When looking to place this type of structure into VA, section 100 of the Limited Partnerships Act 2008 provides that part 15A of the Companies Act 1993 will be applicable. Part 15A sets out the VA process of a company. The LP structure is essentially placed into the shoes of the company structure; with the general partner taking the role of a director, the limited partner being the shareholder, and all the general partners forming the “board of directors”.
As a starting point, the general partner/s of the LP, who form the “board of directors” would be responsible for placing the LP into VA. Once the general partner has placed the LP into VA, an administrator will be appointed. The administrator will review and make changes to your business in an attempt to better the financial position and hopefully prevent liquidation.
You should find comfort in the similarities between the LP structure VA process and company structure VA process, given it can be quite straightforward despite the more complex structure of an LP.
If you are looking to place your limited partnership into voluntary administration, get in touch with us so we can help look at your current options and see if Voluntary Administration is the appropriate way forward for your business.
Options become progressively limited over time. The sooner you act the more control you will have going forward. Please contact us at [email protected] or call us on 0800 CLOSED.