In the current economic climate, LLPs and their members are being forced to grapple with insolvency legislation. Applying the provisions of the corporate insolvency regime established by the Insolvency Act 1986 to LLPs is not straightforward. One of the issues is whether an individual member can apply to wind up an LLP.
It is clear that an LLP can be wound up by the LLP or its members collectively or by any contributory or creditor. However, it is uncertain whether the Court would also allow an individual member the right too (even if that member is not a contributory or creditor).
Obviously it is not in the interests of the LLP or majority of its members to be faced with the disruption of dealing with a winding up petition presented by a disgruntled individual member. Therefore, given the current uncertainty as to how the corporate insolvency rules apply to LLPs, it would be prudent to ensure that the LLP Agreement provides that a specified majority of members is required to petition for winding up an LLP.
This is another example of the importance of a well drafted LLP Agreement as the default rules in the LLP Regulations 2001 do not assist on this point.