Section 60 of LLP Act, 2008 : Section 60: Compromise, Or Arrangement Of Limited Liability Partnerships

Explanation using Example

Imagine that XYZ Design LLP, a limited liability partnership, is facing financial difficulties and owes a substantial amount of money to various creditors. The partners of XYZ Design LLP propose a compromise to settle the debts by paying a portion of the amounts owed to each creditor, rather than the full amounts.

Following Section 60 of the Limited Liability Partnership Act, 2008, XYZ Design LLP applies to the Tribunal to call a meeting with its creditors to discuss and vote on the proposed compromise. The Tribunal orders the meeting, which is conducted according to prescribed procedures.

At the meeting, the creditors holding three-fourths of the total debt value agree to the compromise. XYZ Design LLP then seeks the Tribunal's sanction for this compromise. The Tribunal reviews the proposal and, after ensuring that all material facts and financial positions have been disclosed, sanctions the compromise.

XYZ Design LLP is then required to file the Tribunal's order with the Registrar within thirty days. If they fail to do so, they and their designated partners face penalties as outlined in the Act.

Additionally, the Tribunal has the power to stay any lawsuit or proceedings against XYZ Design LLP while the application for the proposed compromise is being considered, providing the partnership with temporary relief from legal actions.