Liability for payment

Businesses that are unable to pay their debts come under different rules depending on what corporate form they have.

What applies for sole traders and proprietorships?

If you are a sole trader or have a sole proprietorship, you and your business activity are the same thing. That means we can attach your assets for private debts as well as for debts related to your business.

What applies for businesses that are companies?

The company is liable for payment of the debts if you conduct your business in:

• a limited company
• a general partnership
• a limited partnership

What applies for associates?

There are different rules for associates, or partners, in a general or limited partnership.

Partners

• in a general partnership are personally liable, jointly and severally
• in a limited partnership are wholly or partly liable. This means that some partners’ liability is limited to what they invested in the partnership. They are called limited partners. There has to be at least one partner with unlimited liability, a general partner.

It is up to the individual or entity with a claim against the company to decide if they want to apply for a payment injunction, i e have the debt established, only against the partnership, only against the partners, or against both the partnership and the partners.

If the verdict states that it is the partnership that is liable for payment we can only attach the partnership’s property.