If your company is experiencing warning signs of insolvency, you will likely be aware of the role of an insolvency practitioner. Even if there are positive indicators suggesting that your business will be able to be rescued, understanding what an insolvency practitioner is, what they do and how you can find one is vital for navigating a challenging financial situation.
What Is An Insolvency Practitioner?
An insolvency practitioner, sometimes known as an IP, is a licensed professional who helps companies and individuals facing financial difficulty or insolvency. They play a vital role in the different liquidation processes, from being appointed by company directors to assist with Members’ Voluntary Liquidation (MVL), to being enlisted by the court during compulsory liquidation circumstances. Insolvency practitioners may also be utilised by businesses taking measures to rescue their business, like administration and or a Company Voluntary Arrangement (CVA).
Many insolvency practitioners come from accountancy backgrounds, but all must hold the appropriate license and meet the following criteria to act on behalf of your company:
- Passed the relevant Joint Insolvency Examination Board (JIEB) exams.
- Approved and regulated by a professional body that inspects their work.
- Obtained experience in insolvency work.
What Does An Insolvency Practitioner Do?
While insolvency practitioners are commonly associated with formal insolvency processes, they play an equally important role for businesses that have yet to reach this stage and can recover. Their role can generally be summarised as providing professional advice and guidance to companies in trouble, split into the following three categories:
Liquidate companies
If your company chooses to enter or has to enter a formal insolvency process, a licensed insolvency practitioner must be appointed. They oversee both CVLs and MVLs to ensure that necessary regulations are followed and that any remaining company assets are appropriately passed onto creditors.
Assist with administration
Insolvency practitioners can also be appointed in situations where business rescue is possible. If a company is entering into administration or pre-pack administration, an IP will oversee the process. They will assess the different options available to the business and recommend a sale of the company or company closure.
Act as nominee and supervisor
When a Company Voluntary Arrangement (CVA) takes place, a nominee has to propose the CVA. An insolvency practitioner will be instructed to do this and then supervise the proposed agreement should it be passed onto creditors.
How To Find An Insolvency Practitioner
If you need to utilise the services of an insolvency practitioner, knowing how to find one can be difficult. The government database of insolvency practitioners is a suitable place to start if you do not already know an insolvency practitioner in your existing network. The government search tool can also help you to verify that an insolvency practitioner is licensed and has the correct credentials to safely help your company.
The team of friendly and expert insolvency practitioners at Ballard Business Recovery can also help you if your company is in or approaching financial trouble. We will help you understand your options and work with your company to get the best outcome, whether that is recovery or a smooth liquidation process. Get in touch today to discuss your needs and receive advice.
