Sole Trader & Partnership Insolvency banner


Home / Services / For Individuals / Sole Trader & Partnership Insolvency

Sole Trader & Partnership Insolvency

The challenges of running a business cannot be underestimated, particularly for a sole trader or partner. The financial aspects alone can present significant difficulties, especially if, for example, cash flow stalls or a legal dispute arises.

The reality of operating as a sole trader or partner in a partnership (other than limited partners, or partners in Limited Liability Partnerships (‘LLPs’)) is that you are personally liable for your business debts. This means that, where financial difficulties arise, you may face bankruptcy, as well as the potential closure of your business.

Our insolvency solicitors have substantial experience advising and supporting sole traders and partnership businesses during their time of need.

We understand what is at stake for you. We can provide clear, sensible advice about the range of options for resolving debt issues that are available to you, including:

We also provide advice to the owners and directors of limited companies and partners in Limited Liability Partnerships. Find out more about how we can help businesses.

If you are an Insolvency Practitioner who requires legal advice about handling the insolvency of a sole trader or partnership, visit our Insolvency Practitioners page.

If you are a creditor looking for advice on recovering a debt from a sole trader or partnership, visit our Lender and Creditor Services page.


Why our market-leading insolvency solicitors are the right choice for sole traders and partnership businesses

Independently recognised expertise

We are highly regarded for our work with sole traders and partnership businesses, with independent rankings in leading client guides, Chambers & Partners and  the Legal 500.

A broad range of experience

We have experience advising clients across a wide range of sectors, providing the same high quality of advice and customer service whether you are a one-person business, or a large commercial enterprise.

In respect of partnerships, and whether you are operating in an informal partnership, or one governed by a formal partnership agreement, we can advise on the terms of your partnership and the implications of any restructuring or insolvency processes.

We can also advise Limited Liability Partnerships (‘LLPs’), which are subject to different rules than other types of partnership.  As legal entities separate from their designated members, LLPs mainly follow corporate insolvency procedures, and although the partners benefit from limited liability, they can be held personally responsible for the LLP’s debts in certain circumstances.

Your legal options explained in clear language

Restructuring and insolvency involve complex processes which can be daunting.

Our insolvency solicitors are here to provide support during this challenging time. We’ll set out all your legal options in clear language and help you find a practical way forward. You will feel confident in making the decisions you need to make, and be assured that your commercial needs have been completely understood.

Our insolvency services for sole traders and partnership businesses

Informal debt arrangements

If your business has fallen behind on business loan payments, commercial rent, payments to suppliers or any other payment, we can provide advice about your options for resolving the issue.

Debt can snowball very quickly, so addressing the problem early is essential.

The first step towards resolving debt issues is to communicate with your creditors. It may be possible to negotiate a solution, such as temporarily reducing payments, freezing interest, altering payment terms or agreeing a reduced lump sum in full and final settlement of a debt.

Our team are skilled at these types of negotiation. With our advice, you will be in the strongest possible position to approach discussions with your creditors or we can assist with negotiations on your behalf.

Commercial debt recovery

Debt can have a knock-on effect, particularly in uncertain economic times. Just one unpaid invoice can affect your cash flow and put your business at risk.

If you have exhausted your credit control procedures and your debtors will still not repay, putting your own business in jeopardy, our legal experts can help.

We can advise on a broad range of debt recovery options, including taking steps to bankrupt or wind up insolvent debtors.

Find out more about our Commercial Debt and Asset Recovery services.


Operational or financial restructuring can be an effective way of improving cash flow and returning a business to profitability. We will work with your business, whether you are a sole trader or partnership, to identify opportunities to restructure and resolve debt issues, from reviewing and renegotiating the terms of a partnership agreement, to entering into Individual or Partnership Voluntary Arrangements.

Individual Voluntary Arrangements

An Individual Voluntary Arrangement (‘IVA’) is a formal and binding agreement between an individual and their creditors to pay off a proportion of their debts over a specified period of time.

So long as 75% of the individual’s creditors (in terms of debt value) agree to the IVA, the majority will be bound by it (secured creditors are usually not bound). While the IVA is in place, the bound creditors cannot take legal action against the individual in respect of their IVA debts, providing the individual with vital breathing room to address their debts. Once the IVA ends, any remaining debts are usually written off, in accordance with the terms of the IVA.

IVAs are often an effective alternative to bankruptcy, particularly for sole traders whose businesses are viable in the long-term, but may be affected by temporary cash flow issues. An IVA, provided its terms are adhered to, allows individuals to avoid the significant challenges and restrictions of bankruptcy and usually enables the business to continue trading.

An IVA may also be suitable if you are a partner in a partnership. Individual partners do not automatically become bankrupt upon the insolvency of a partnership, but are personally responsible for the partnership’s debts. One option may, therefore, be for you and the other partners to enter into interlocking IVA’s, potentially in addition to a Partnership Voluntary Arrangement (‘PVA’) in respect of the partnership.

We can provide all the advice you need about entering into an IVA, and any interrelated PVA. For more information, visit our Individual Voluntary Arrangements page.

Partnership Voluntary Arrangements

Similar to an IVA, a Partnership Voluntary Arrangement (‘PVA’) is a binding agreement between a partnership and its creditors, typically to repay a proportion of its debts over a specified period of time.

If 75% of partnership creditors (by debt value) agree to the PVA, then the majority will be bound by it (although, secured creditors are not normally bound). Whilst the PVA is in place, bound creditors cannot take legal action against the partnership to recover their debts. This gives the partners vital breathing room to restructure, or address issues with the business. Once the PVA ends, any remaining debt will usually be written off, in accordance with the terms of the PVA.

A PVA may be right for your partnership if it is facing temporary financial issues, such as an unexpected dip in the market. It can be an effective alternative to liquidation, that allows the partnership to continue trading.

Our insolvency and restructuring specialists can provide all the advice your partnership needs about PVAs. Visit our Partnership Voluntary Arrangements page for more information.


We advise sole traders and partners about bankruptcy, including the personal consequences of bankruptcy, whether it may be right for you, and whether there could be any alternatives.

We can help you take action, whether you are considering applying for bankruptcy yourself, or are facing a bankruptcy petition presented by a creditor. Our services include helping you oppose the making of a bankruptcy order, for example, where you dispute the underlying debt.

Our bankruptcy specialists also advise individuals who have already been made bankrupt .

Partnership liquidation

If a partnership is unable to pay its debts, the best option may be to wind it up. Either the partners themselves, or their creditors, can take action to wind up a partnership. We can assist with and advise upon partnership liquidations, including in relation to:

  • The procedure for winding up a partnership
  • The benefits and risks of liquidation, including whether there are any alternative options, such as a PVA
  • The issue of personal liability, including advice on potential interlocking IVAs
  • Parallel bankruptcy proceedings in respect of one or more of the partners

Disputes & litigation

Our insolvency and restructuring specialists have significant experience helping sole traders and partnership businesses resolve disputes relating to insolvency. Our goal is to help you resolve the outstanding issues as amicably as possible,  including by way  of formal Alternative Dispute Resolution methods, such as mediation and arbitration, if appropriate.

We regularly represent clients in court proceedings throughout England and Wales, as well as handling overseas and cross-border litigation which may be governed by different jurisdictions.

Visit our Litigation and Disputes page for more information about our Insolvency Litigation expertise.

Contact us for sole trader and partnership insolvency advice

For clear, practical advice about dealing with debt, please speak to our expert team in London, Portsmouth or Norwich.