Limited Liability Partnerships (LLPs)

Applicable law

It is important to note that the law relating to partnerships does not automatically apply to a Limited Liability Partnership (LLP), unless otherwise provided. Unlike general partnerships, LLPs have a separate legal personality. LLPs were essentially created to deal with potentially large negligence claims against entities which could bankrupt the underlying partners, who may not necessarily have done anything wrong themselves. Many professional service firms, such as solicitors and accountants, trade as LLPs. The most important distinction between LLPs and general partnerships is that (i) individual members of an LLP will not prima facie be liable for its negligence (unless they are the cause of it) and (ii) the members do not have open-ended personal liability on the LLP's insolvency.

Applicable legislation includes:

1. •

   the Limited Liability Partnerships Act 2000

2. •

   the Limited Liability Partnerships Regulations 2001 (LLPR 2001), SI 2001/1090 (as amended)—which apply the Insolvency Act 1986 (IA 1986) and Insolvency (England and Wales) Rules 2016, SI 2016/1024 to LLPs, subject to necessary modifications

3. •

   the Limited Liability Partnerships (Amendment etc) Regulations 2021, SI 2021/60—which apply the Corporate Insolvency