Partnership Voluntary Arrangement

It is imperative that a PVA is only proposed and agreed where it operates a viable business. The exception would be when the partnership has valuable and readily saleable assets, which can be disposed of to generate cash to pay down debts or provide a short term increase in cash flow while the business is either sold or restructured.

Partnerships facing creditor pressure and cash flow problems, with a viable business may look to a PVA or creditors of a business partnership can cooperate in setting up a PVA to ensure that some or all of their debt is paid rather than waiting for their client to collapse and receiving little or no money back.

A PVA does not provide the partnership with protection, so enforcement action can continue in the period before the creditors meeting that must be called to approve the PVA. Where creditors take action and particularly if the partners have personal assets and liabilities both personally and jointly and severally for the partnership’s liabilities, they may each have to enter into IVAs, which will run concurrently with the PVA.