An Insolvency Practitioner is a licensed professional who offers support to companies and individuals facing financial difficulties. They can be appointed to oversee formal insolvency proceedings, but can also provide help before the point of full insolvency.
It is crucial to seek help from an IP who is licensed, as they are regulated by an authorised organisation and have received extensive training.
Why is the role of an insolvency practitioner crucial?
The responsibilities of an insolvency practitioner (IP) depend on the specific situation, but they can evaluate a company’s financial distress and propose potential solutions if necessary. It’s imperative that directors of a limited company take caution when facing financial troubles.
UK insolvency laws mandate that trading must stop once the company becomes insolvent or when the directors believe insolvency is unavoidable. Seeking the aid of a licensed IP in this scenario is a requirement, as failing to halt trade could be considered director misconduct and result in further financial losses for creditors.
Who are the people designated as insolvency practitioners?
Insolvency practitioners who hold a licence can come from different professional backgrounds, such as law or finance. They may work within a company’s insolvency department in these fields or be part of a dedicated insolvency firm.
It is essential to verify an insolvency practitioner’s licensing status prior to engaging them, as not all individuals or firms claiming to offer insolvency services are regulated or qualified to provide effective guidance and support.
What are the duties of an insolvency practitioner?
Professional advice and support
An insolvency practitioner can be a valuable asset for companies facing financial difficulties. The perception that they only step in when a business is on the brink of collapse is incorrect. They can assist in implementing measures to bring the company back from the brink of liquidation.
The UK insolvency framework is favourable to businesses, providing a range of options for companies in financial trouble. The main objective of an IP is to help the business recover and ensure its long-term stability.
Official insolvency procedures
In the UK, a licensed insolvency practitioner must be appointed to manage formal insolvency procedures like company administration, Company Voluntary Arrangements (CVAs), and liquidation. They are responsible for selling the assets of the business and distributing the proceeds to creditors. Additionally, they must also examine the actions of the directors prior to insolvency.
Aside from helping limited companies, a licensed IP provides guidance and support to individuals and sole proprietors in financial difficulty. They offer advice on options like Individual Voluntary Arrangements (IVAs), Debt Relief Orders (DROs), and bankruptcy.
Closure of solvent companies
When a company director decides to retire and there’s no one suitable to take over the business, they may opt for a solvent liquidation process known as Members’ Voluntary Liquidation (MVL). This process, even though the company is financially sound, must still be carried out according to statutory regulations and therefore a licensed insolvency practitioner (IP) is appointed to oversee the proceedings and ensure compliance.
Professional and moral obligations of an insolvency practitioner
To become a licensed insolvency practitioner, individuals must pass the Joint Insolvency Examination Board exams and gain extensive practical experience. They must also be approved by a professional regulatory body, which performs ongoing evaluations and evaluations of their work.
For assistance and additional information, reach out to our team of licensed IPs at InsolvencySupport.co.uk. We offer complimentary consultations on the same day and have a nationwide network of offices.