Question

Earl, Louise and Erik carried on business in partnership for many years under the firm name ELE Sales. The partnership was registered under the provincial partnership registration legislation. Earl and Louise were the two partners that dealt with customers and suppliers, and Erik worked for the most part out of sight of everyone in a back office where he did the bookkeeping for the business.
Erik eventually retired, leaving the business without informing either customers or suppliers. Earl and Louise carried on the business for another few years, but without the management skills of Erik, the business ran into financial difficulties. Earl and Louise decided to close the business, and paid most of the creditors. The remaining creditors now wish to take action to recover their debts.
Advise the creditors.

Answer 1

Advise to the creditors:

The creditors can’t simply sue the company for the recovery of their dues. In this case the remaining creditors simply can’t take action against Eric and Louise for the recovery of their debts. The collect the debt, they must first sue the partners in the court, based on the judgement awarded, the settlement should be made by the partners.

Similarly, creditors can sue if their debt is guaranteed by any collateral by the partners.

The case also mentions that few creditors have been settled. This is because some of the creditors have more right to recover the payment compared to others

Since this is a partnership firm, the partners here are individually responsible to pay off the remaining creditors as well from their personal assets.

Therefore, in this case, creditors can be advised to move to the court of law for recovery of their debts and in this case, Eric and Louise have the sole responsibility of settling the remaining creditors as well by making payment from their personal assets.