NSW Possible for One Partner to Assume All Debt?

[Ann1]

When one person is leaving a partnership and the other will continue the business as a sole trader, is it possible for the partner continuing on the business to assume all debt occurred if both parties agree and sign a document stating this?

 

[Rod]

Not always. Depends on the type of debt and if any personal guarantees have been given. The 3rd parties holding the guarantees do not have to relinquish their right to 'call-in' the debt from the guarantor just because you've got a separate agreement to take on the debt. However, the new debt agreement may mean your partner can sue you for the debt if the 3rd party goes after them instead of you.

 

[Serge Gorval]

Yes, you need a deed of indemnity and guarantee, whereby the sole trader indemnifies you for any and all debts owed.