An insolvency practitioner is a licensed professional licensed to act for, or on behalf of, individuals, partnerships, or companies who are insolvent. An insolvency practitioner is a licensed professional that offers insolvency services to businesses seeking to save or wind up their limited companies, and individuals seeking resolution to their personal debt problems. Insolvency practitioners are known as liquidators in liquidation, administrators in administration, receivers of assets in receiverships, nominators or overseers in voluntary business arrangements or voluntary personal arrangements, or trustees in bankruptcy.
If the insolvency practitioner has been appointed to advise a corporate board before a formal insolvency proceeding begins, they will advise directors and outline their duties during that period. If a company director chooses to wind up the company, they must nominate a licensed insolvency practitioner to carry out this work on their behalf. Depending on insolvency proceedings, an IP may need to enter into negotiations with creditors in order to save an insolvent company.
In some cases, an IP will advise a person who is facing insolvency until a formal insolvency procedure begins. For the most common, and usually simpler, formal insolvency processes, such as Creditors Voluntary Liquidation (CVL) or Member Voluntary Liquidation, the fee charged by an IP is typically a standard lump sum agreed beforehand. An IP may work with directors of troubled limited companies and provide advice for a number of formal insolvency processes including Creditors Voluntary Liquidation (CVL), Companies Voluntary Arrangements (CVAs) and Companies Management.
A licensed IP should be appointed to manage official insolvency processes in the UK, including Company Administration, Company Voluntary Arrangements (CVAs), and Company Liquidation. As we have mentioned, it is essential that you make sure that the IP is licensed before you nominate them, because a person or company that advertises itself as providing insolvency services is not necessarily regulated or qualified to provide practical advice and assistance. Dealing with insolvency matters is a highly technical role, so you should always make sure that when seeking advice, you are dealing with the licensed IP, or their firm, directly, rather than with a third-party referral.
Some firms do offer advice on insolvency, but because they themselves are not licensed IPs, will refer you elsewhere, and will charge you a fee to do so. You can use the Internet to locate a licensed practitioner; speak with your accountant, or use the a recommended Insolvency Service like Bridge Newland. Insolvency experts provide personal, professional advice which may assist in protecting your business.
Getting the advice of a specialist insolvency professional offers tremendous benefits for companies that are struggling financially, and may help prevent further deterioration to the point that they end up liquidating. In the early stages, an insolvency practitioner may offer business directors professional advice during a pre-insolvency scenario, in order to attempt to save a company and get it back on the right path. For many businesses, appointing an insolvency practitioner is usually done when distress levels reach unmanageable levels and directors feel that they are no longer in a position to continue in their current circumstances.