Insolvency of a partner

Querist : Anonymous (Querist) 09 December 2023 This query is : Resolved
Hi, I would like to understand if a Person "X" has declared insolvency in his Pvt Ltd company "A" and has a legal case in progress with creditors, can "X" continue to be a partner in a Partnership Firm "B" OR can "X" transfer his partnership in "B" to his Son/Daughter/Wife?

Follow Query

Report Abuse

Quick Summary

If an individual has been declared insolvent concerning their private limited company and is involved in legal proceedings with creditors, their ability to remain a partner in a separate partnership firm is affected. Generally, a partner ceases to be part of a partnership from the date an insolvency adjudication order is made. Regarding transferring their partnership interest, this is possible if the partnership agreement allows for it. It's crucial to review the partnership deed or consult a legal professional to confirm the specific terms and conditions related to a partner's insolvency and transfer of shares.

T. Kalaiselvan, Advocate (Expert) 10 December 2023
The partner cannot continue as one in the firm after being insolvent. The partner ceases to be a partner from the date on which the order of adjudication is made. Transfer of partnership can be done as per the articles of association of the company, if there is a provision for that.

kavksatyanarayana (Expert) 10 December 2023
Yes. Usually, in the Partnership deed, one of the terms/conditions will be noted if any partner's insolvency will cease his business in partnership. Verify the partnership deed or show it to a local advocate/CA.

Previous

Next

You need to be the querist or approved LAWyersclub expert to take part in this query .

Click here to login now

Similar Resolved Queries :

Ask Query
Unanswered Queries