Limited Liability Partnerships ("LLPs")

LLPs were introduced on 6 April 2001 and are popular with professional practices which tended to operate as partnerships but did not have the benefit of limited liability.

The LLP is partially governed by Company Law and Partnership Law and is consequently responsible for trading debts.  The members’ liability is usually restricted to the amount of capital they have introduced.  Each member of the LLP is classed as self-employed and is therefore responsible for their own tax.

A further advantage is that unlike a normal partnership, the members of an LLP are not joint and severally liable for the actions of another member.

Insolvency proceedings for an LLP follow those of a limited liability.  In the event that an LLP becomes insolvent, then The Limited Liability Partnership Regulations 2001 provide that certain parts of the Insolvency Act 1986 (as modified) will apply.

An LLP may therefore:-

• Propose a Company Voluntary Arrangement with its creditors
• Enter into administration
• Be placed into voluntary liquidation
• Be wound up on a compulsory basis