Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Insolvency definition

What does Insolvency mean? In practice, insolvency describes a financial state where a debtor cannot meet liabilities when due, triggering remedies such as administration, liquidation or bankruptcy and informing directors’ duties and avoidance claims. For companies in England & Wales, Scotland and Northern Ireland, the Insolvency Act 1986, s 123 sets two alternative tests: - Cash‑flow insolvency: an inability to pay debts as they fall due. The inquiry is practical and forward‑looking, not confined to today’s bills (Re Patrick & Lyon Ltd [1933] Ch 786; BNY Corporate Trustee Services Ltd v Eurosail [2013] UKSC 28). - Balance‑sheet insolvency: liabilities (including contingent and prospective liabilities) exceed assets on...

Insolvency of general partnerships: expenses and debt priorities for joint and separate estates, including financial firm ranking and Brexit changes (Insolvency Act 1986; Insolvent Partnerships Order 1994)

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

Applicable law

The common law prior to the Insolvency Act 1986 (IA 1986) embraced a pragmatic rule: when dealing with the estates of an insolvent partnership and its partners, liabilities of the firm should be discharged from firm assets, whilst a partner’s personal liabilities should be satisfied from that partner’s own assets. This rule of convenience kept firm and personal funds separate at first instance, and guided the conduct of overall administration. Where either estate proved insufficient, any shortfall was to be met from any surplus available in the other estate or estates (see Re Rudd & Son). This Practice Note considers the regime relevant to matters within the ambit of the Insolvent Partnerships Order 1994 (IPO 1994), SI 1994/2421. For guidance on what amounts to partnership property in a General partnership, see Practice Note: The nature of a general partnership and its legal framework, and News Analysis: Court determines property is only partnership property where so agreed by the partners (Wild v Wild and Others)...

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Natasha Dzameh

St John's Chambers

Natasha is a specialist commercial and chancery barrister who is consistently ranked as a leading junior in Chambers UK and Legal 500. She has been described as someone who has “a good way with clients” as well as being “an assertive and tenacious advocate”, “very responsive, extremely thorough, pragmatic and easy to work with as part of the team”, “approachable” and “extremely intelligent, with an eye for practical and innovative solutions”. Natasha is often instructed as sole counsel in high value, multifaceted litigation. She has experience of acting as junior to senior counsel on particularly complex matters and working in teams of counsel on large scale, high value, document-heavy government disputes. Her clients range from individuals to major financial institutions and international companies including high street brands. Natasha’s main areas of expertise are: Commercial disputes – agricultural, banking and financial (including...

Web page updated on 21/05/2026

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