Navin Lalwani 09 December 2023

Insolvency of a partner

If a person "X" has declared insolvency of his Pvt. Ltd. Company "A", can "X" continue to be a Partner in another Partnership firm "B"?

Can "X" transfer his partnership in "B" to his spouse or kids?

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Quick Summary

This discussion explores whether an individual declared insolvent for their private limited company can continue as a partner in a separate partnership firm. It clarifies that insolvency typically disqualifies a partner from the date of adjudication. The possibility of transferring a partnership interest to family members is also considered, depending on the firm's articles of association.

2 Replies

T. Kalaiselvan, Advocate (Advocate) 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.

Dr. J C Vashista (Advocate ) 10 December 2023

Since "X" is stated to have been declared insolvant after considering assets vis-a-vis liabilities and liquidation of his firm "A" his firm "B" , accordingly no assets are left unaccounted in case of firm "B".

So many "ifs" make the query as hypothetical and academic, repost if it is a real story.