Limited Partnerships Act 2008

General - Terminating events, liquidation, and deregistration

91: Meaning of inability to pay debts

You could also call this:

"What it means for a limited partnership to be unable to pay its debts"

Illustration for Limited Partnerships Act 2008

When you are looking at if a limited partnership can pay its debts, it means the partnership cannot pay what it owes. You will know a limited partnership is unable to pay its debts if a creditor asks for payment of over $100 and the partnership does not pay or make a plan to pay within three weeks. This is according to section 90(1)(h).

You will also know a limited partnership is unable to pay its debts if someone takes the partnership to court and the partnership does not pay what it owes within 10 days of being told about the court case. Another way is if the court tries to get money from the partnership but cannot. The court can also decide if the partnership can pay its debts by looking at what the partnership might owe in the future.

The court looks at all the money the partnership owes, including money it might owe later, to decide if it can pay its debts. This helps the court make a fair decision about the partnership's ability to pay what it owes. You can find more information about this in the court's decisions.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

This page was last updated on 30 August 2025

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1139255.

Topics:

Business > Starting a businessBusiness > Industry rules

90: Grounds for Court appointment of liquidator, or

"When can a court choose someone to close down a limited partnership?"

92: Application of Companies Act 1993, or

"Some company rules apply to limited partnerships when they are closing down"

Part 2General
Terminating events, liquidation, and deregistration

91Meaning of inability to pay debts

For the purposes of section 90(1)(h), a limited partnership is unable to pay its debts—
if—
1. a creditor who is owed an amount exceeding $100 by the limited partnership has served on the limited partnership a demand for payment of that amount; and
2. the limited partnership has for 3 weeks after the demand was served on it failed to pay the amount due or secure the payment of it or compound for it to the satisfaction of the creditor; or
if—
1. an action or proceeding has been commenced against a general partner of the limited partnership for the payment of an amount owing by the limited partnership or that general partner in his or her capacity as a general partner; and
2. notice in writing of the action or proceeding has been served on the limited partnership; and
3. the limited partnership has not, within 10 days after the notice was served on it, paid or secured the debt, or compounded for it or had the action or proceeding stayed or indemnified the general partner for the amount of any judgment that may be entered against him or her and any costs, damages, and expenses that may be incurred by him or her in the action or proceeding; or
if execution or other process issued on a judgment, decree, or order obtained in a court in favour of a creditor against the limited partnership, or a general partner of the limited partnership in his or her capacity as a general partner, or a person authorised to be sued on behalf of the limited partnership, is returned unsatisfied; or
if it is proved to the satisfaction of the Court that the limited partnership is unable to pay its debts, and in determining whether a limited partnership is unable to pay its debts, the Court must take into account the contingent and prospective liabilities of the limited partnership.

Compare

s 17C