The three partners entered into a partnership agreement, which provided that any decision to apply for an administration order required the unanimous approval of the partners. One of the partners sought an administration order in relation to the partnership, pursuant to paragraph 12 of Schedule B1 to the Insolvency Act 1986, as modified, which permitted an administration application to be made by the members of an insolvent partnership in their capacity as such, or one of more of the partnership’s creditors. The application was opposed by the other two partners on the grounds, inter alia, that (1) the application had been brought without proper authority, and (2) the applicant partner was not a creditor of the partnership.
On the application—
Held, application granted. A single non majority member could not apply for an administration order, pursuant to paragraph 12 of Schedule B1 to the Insolvency Act 1986, especially where the partnership deed provided to the contrary. However, since the partnership was unable to pay its debts and, in the circumstances, an administration order would achieve a better result for the creditors as a whole in comparison to liquidation of the partnership, a creditor, who had stated her willingness to be joined to the litigation, would be added as an applicant and the administration order granted (paras 51, 52, 54, 55, 58, 69, 70).
Gideon Roseman (instructed by Moore Blatch) for the applicant partner.
The first and second partners in person.
The interested creditor in person.