Limited Liability Partnerships Act 2012 · Updated to 1 Aug 2022 · Part IV · Management of a Limited Liability Partnership
22. Liability of partners when limited liability partnership is insolvent
Feedback & supportNotwithstanding anything under this Act, a partner or former partner of a limited liability partnership who receives a distribution from the limited liability partnership—
partner
“partner”, in relation to a limited liability partnership, means any person who has been admitted as a partner in the limited liability partnership in accordance with the limited liability partnership agreement, and includes a salaried partner whether or not he is an employee of the limited liability partnership;
when the limited liability partnership is insolvent and knew or ought to have known at the time of the distribution that the limited liability partnership was insolvent; or
which results in the limited liability partnership becoming insolvent and knew or ought to have known at the time of distribution that the limited liability partnership would
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become insolvent as a result of the distribution, shall be personally liable to the limited liability partnership for the amount or value of the distribution if it was received within a period of two years before the commencement of the winding-up of the limited liability partnership.
For the purposes of this section—
a limited liability partnership is insolvent if it is, at that time, unable to pay its debts as they become due in the normal course of business; and
a partner or former partner shall be deemed to have received a distribution if the distribution is received by that partner or former partner’s assignee or nominee.