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In LLP ,under liability of debts I could not understand the line ” If an LLP goes into liquidation, the court can order the members to repay any drawings made in the previous two years if it can be shown that the member knew or had reasonable grounds to believe that the LLP :
was unable to pay its debts at the date of withdrawal or
would become unable to pay its debt because of the withdrawal.sir can you pls simply above statement?
Where an LLP is headed to insolvency the partners will probably wish to remove their investments in the firm by way of drawings
To do so will probably be to the detriment of the LLP creditors who could find that they are not going to be paid in full because …. the partners have taken the firm’s assets to repay themselves
So a Court may direct that any such drawings in the previous 2 years should be repaid into the firm thus allowing a greater payment to the firm’s creditors
OK?
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