Question

The business assets of an organisation amount to Rs. 50,000 but the debts that remain unpaid are Rs. 80,000. What course of action can the creditors take if
(a) The organisation is a sole proprietorship firm?
(b) The organisation is a partnership firm with Anthony and Akbar as partners? Which of the two partners can the creditors approach for repayment of debt? Explain giving reasons.

Answer 1

(a) They can claim over the personal property of sole proprietor as his liability is unlimited.
(b) Creditors can approach both Anthony and they are liable to pay back in their profit sharing ratio but I case one of the partners insolvent then creditor can claim from only one partner also.