Winding up of any entity signifies that the entity has been brought to an end and no more in a position to discharge its obligations & functions. Similarly, winding up of Limited Liability Partnerships (LLP) states that the LLP has come to an end and all the assets are being sold and the liabilities are to be paid off by the members/ partners of LLP from the proceeds realized. A limited liability partnership can be wound up in two cases â€“ 1.Â Â Â Â Â Voluntary winding up by members / creditors 2.Â Â Â Â Â Compulsory winding up , i.e. by the Tribunal In this article we will focus on the circumstances in which LLP can be compulsorily wound up by the Tribunal. A company or limited liability partnership (LLP) can be put into compulsory liquidation if it cannot pay its debts. Following are the situations in which LLP can be wound up compulsorily by the Tribunal â€“
- If the limited liability partnership decides that it should be wound up by the Tribunal.
- If the no. of partners of LLP is reduced below 2, for a period of more than 6 months.
- If the Tribunal is of the opinion that it is just and equitable that the LLP should be wound up.
- If the LLP is unable to repay its debts.
- If the LLP has made mistake in filing with the Registrar a Statement of Account and Solvency for any 5 consecutive financial years.
- Â If the LLP has acted any time against the interest of the sovereignty and integrity of India, and the security of the State and public order.
Procedure to get wound up – The winding-up process begins with the winding-up petition. The winding-up petition is an application to set a date for a hearing in court to determine whether a company or limited liability partnership (LLP) may be wound up and put into compulsory liquidation. Those who can petition the court to wind up a company or limited liability partnership (LLP) include:
- one or more creditors who are owed more than Â£750
- a company or LLP itself
- the directors or shareholders of a company or designated members of an LLP
- the supervisor of a voluntary arrangement
- the administrative receiver or administrator
- the Secretary of State for Business, Innovation & Skills
- the Financial Services Authority
- an Official Receiver (OR)
You should get procedural information about the winding-up procedure from the court to which you intend to apply. There are a number of steps that need to be followed in the winding-up process.