Insolvency options for sole traders and partnerships
The question of personal liability for the business debts needs to be clearly understood.
If you trade as an individual you are personally liable for the business debts incurred. There is no legal separation and creditors will pursue you for settlement.
Partners are jointly and severally liable for all business debts and creditors can pursue all partners for the total debt. In the event that full payment cannot be recovered from one partner, they will recover payment in full from any other partners.
In the event that a partner becomes bankrupt, the liability will be written off for that partner, however, creditors will still proceed with recovery from the remaining (or former) partners for the debt(s).
The business is in difficulty - What are the options for sole traders and partnerships?
Acknowledging that there is a problem is often the hardest step.
Understanding the problem will require time and effort to identify where specifically the business is failing in order to determine whether the business is worth saving or not.
Follow the links below for further detail on the insolvency options for sole traders and partnerships
- Insolvency options for sole traders and partnerships
- Insolvency options for limited companies