Rights to partnership property on dissolution PA 1890 s.39
On dissolution, partners can require partnership property be applied first to pay firm debts, then to settle accounts between partners. Court can wind up.
On the dissolution of a partnership every partner is entitled, as against the other partners in the firm, and all persons claiming through them in respect of their interests as partners, to have the property of the partnership applied in payment of the debts and liabilities of the firm, and to have the surplus assets after such payment applied in payment of what may be due to the partners respectively after deducting what may be due from them as partners to the firm; and for that purpose any partner or his representatives may on the termination of the partnership apply to the Court to wind up the business and affairs of the firm.
Text in force at .
Source: legislation.gov.uk — The National Archives (legislation.gov.uk), reproduced under licence Open Government Licence v3.0.
What it actually says
When a partnership ends (dissolution), this section gives each partner the right to insist that the partnership's assets be used in a specific order. First, all debts and liabilities of the firm must be paid. Only after that can the remaining property (surplus) be used to settle what the partners owe each other – for example, returning capital or sharing profits.
If there is disagreement, any partner (or their estate if deceased) can ask a court to formally wind up the business. The court then oversees the sale of assets, payment of debts, and final distribution. This section does not itself create the right to dissolve the partnership; other sections (like s.32 to s.35) deal with how dissolution happens.
When it applies
- A partner wants the partnership office building sold to pay off the firm's bank loan before dividing any leftover money.
- Two partners disagree: one wants to keep a partnership asset as part of his share, the other insists it be sold and the proceeds used to pay debts first.
- After a partner dies, the deceased partner's executor demands that the partnership assets be applied to creditors before distributing to the surviving partner.
- A partner discovers that another partner is trying to take partnership property for personal use before the firm's debts are cleared.
What this section does not say
- This section does not determine who gets specific partnership assets in a divorce between partners; that is a matter of family law.
- It does not give a partner the right to force a dissolution; that is governed by sections 32 to 35.
- It does not set the priority of different types of creditors when the partnership is insolvent; that is determined by insolvency law.
- It does not cover the duty to render accounts or share profits during the partnership; those are under sections 28 and 29.
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This page reproduces the text of PA 1890 s. 39 in force at the date shown and explains it in general terms. It is not legal advice and takes no account of the circumstances of your case, which can change the answer completely. For a live dispute, for limitation periods, and before taking any step in court, consult a qualified lawyer in England and Wales.