Winding Up LLP

LLP winding up is the process of closing down the LLP, settling its liabilities, and distributing remaining assets to partners. It occurs when the LLP is unable to pay debts, the number of partners reduces below two for 6 months, the LLP has acted against national interest, or partners decide to dissolve voluntarily.

LLPs can be wound up voluntarily (by partners' decision), by Tribunal (compulsory winding up on specified grounds), or through a creditors' voluntary winding up. Most LLPs opt for voluntary winding up as it is faster and simpler.

The procedure involves passing a resolution for winding up with 3/4th majority, filing the resolution with the Registrar within 30 days, making a declaration of solvency (if applicable), appointing a liquidator, settling debts and liabilities, distributing surplus assets, preparing final accounts, and filing Form 24 for striking off.

Form 24 is the application for striking off the name of the LLP from the Register of LLPs. It is filed after winding up is complete or for defunct LLPs that have not commenced business or are not carrying on any business.

Grounds include inability to pay debts, number of partners reduced below two for 6 months, LLP acting against national sovereignty or integrity, fraud in incorporation or business conduct, and failure to file financial statements or annual returns for 5 consecutive years.

The liquidator realizes the LLP's assets, settles claims of creditors and partners, distributes surplus assets according to profit-sharing ratios, prepares the final statement of accounts, and files necessary forms with the Registrar. The liquidator must be a qualified insolvency professional for certain winding up cases.

During winding up, the LLP must cease business except for beneficial winding up, maintain books of accounts, file necessary forms with the Registrar, publish winding up notices in newspapers, notify creditors, and obtain tax clearance certificates.

Voluntary winding up typically takes 6-12 months depending on complexity of asset realization and creditor settlement. Compulsory winding up by Tribunal may take 1-3 years due to legal procedures and court oversight.

During winding up, debts are paid in the order of priority: secured creditors, workmen's dues, government dues, unsecured creditors, and finally partners (return of capital and share of profits). Partners have unlimited liability if assets are insufficient to pay debts.

Yes, an LLP struck off the register can be restored within 20 years by filing an application with the Tribunal if it was carrying on business at the time of striking off, or the closure was done without proper procedure. Restoration revives the LLP as if it was never dissolved.