Entitlement of the personal creditor of the insolvent partner or sole owner to petition for the dissolution of a partnership or single-owned limited liability business

Abstract

This paper aims to ascertain whether the personal creditor of a partner, and also of the sole owner of a single-owned limited liability business, can seek its dissolution due to the insolvency of the debtor, thereby enhancing the debtor's financial capacity through the distribution of the liquidation dividend. The study delves into the authentic historical context of the Civil Code provisions applicable to the subject, as well as the rationale laying behind them, both within the context of general partnerships, limited liability limited partnerships and single-owned limited liability businesses. Considering that the interpretation is conditioned by the business form, and that the outcome should balance the interests of both business and personal creditors, it is concluded that in general partnerships and individual businesses, the personal creditors of an insolvent partner or owner can seek the dissolution of the partnership or the termination of the business. In contrast, the personal creditors of a partner in a limited liability limited partnership cannot do so, as it would disrupt the balance between the two groups of creditors.