An insolvency practitioner is a licensed professional who specialises in helping businesses and individuals deal with financial distress. Whether you are seeking help to close your company or to turn it around with the aim of returning it to profitability, your choice of IP will have a significant impact on how successfully you may be able to achieve your desired outcome.
When choosing an insolvency practitioner, it is vital that you find one who operates locally to your business. This will enable you to meet with them face-to-face, which can be invaluable in ensuring that you receive the best advice possible. Furthermore, an IP who operates locally will have a good understanding of local business issues and rules that can affect a firm’s ability to trade, which is particularly important in procedures such as a Company Voluntary Arrangement (CVA).
The easiest way to check if an insolvency practitioner is licensed is by using the government’s find an insolvency practitioner page, which allows you to search by name, town/city or county. This will show you all the licensed IPs in your area who have registered with the Insolvency Service. Any reputable IP should be happy to provide you with their registration details so that you can validate their credentials; be wary of any who are reluctant to do so.
Once an insolvency practitioner has been appointed, they will have a number of different duties that they must fulfil. This will depend on the type of procedure being undertaken, but in all cases they will need to act with honesty and integrity and take into account the interests of creditors. In addition, the IP will need to be able to communicate effectively with both directors and creditors in order to maximise the return for all parties.
In the case of a company that is insolvent, the IP will oversee the closure process, which can include liquidation. They will also liaise with creditors and sell off any assets that can be sold to realise money for the benefit of creditors.
Individuals can be assisted by insolvency practitioners through a range of rescue solutions, such as an Individual Voluntary Arrangement (IVA). These are designed to minimise problems and allow the individual to continue trading whilst they work to repay their debts. In both cases, the insolvency practitioner will act as ‘nominee’ and supervise the implementation of the solution for its duration.
The decision as to what action to take in an individual’s case is usually taken by the insolvency practitioner following discussion with the individuals and their creditors. It is not uncommon for creditors to make demands that are inconsistent with the law, and in these instances, a director should seek legal advice from an insolvency practitioner.
Directors should be aware that any misconduct during a period of financial difficulty can result in them being disqualified from their position as a director for up to 15 years. Therefore, they should seek prompt advice from an insolvency practitioner in order to protect their personal and professional reputations.