We explain what an insolvency practitioner is in the UK, and their role in helping distressed companies.
Below, we’ll cover their qualifications, how they’re regulated, who appoints them and how they’re paid.
Insolvency Practitioner: Definition
Insolvency practitioners (IP’s), are individuals authorised to act in relation to an insolvent individual, partnership or limited company as laid out in the Insolvency Act 1986.
Licensed insolvency practitioners in the UK are often either chartered accountants, lawyers or solicitors working within an accountancy or law firm.
They must have:
- passed the JIEB insolvency examinations
- gained relevant experience in insolvency work
- demonstrated to a regulator (an authorising organisation) that they are fit and proper to work as an insolvency professional
What Does an Insolvency Practitioner Do?
Although their role differs slightly depending on the particular type of procedure, an insolvency practitioner’s first goal is to rescue the business.
Beyond that, their basic duties are to realise company assets for the benefit of creditors.
The role typically involve a number of tasks, including dealing with the insolvent company’s creditors or, in the case of a business rescue procedure such as administration, offering advice as to how the company may avoid liquidation altogether.
Much of their role is investigative, too, as the IP has a legal duty to examine the activities of the company directors to check for the possibility of wrongful or fraudulent activity.
A licensed insolvency practitioner can manage any of the following formal procedures within their appropriate roles:
- Winding up Petitions
- Company Voluntary arrangements
- Creditors’ Voluntary Liquidation
- Individual Voluntary Arrangements
- Members’ Voluntary Liquidation
Qualifying as an Insolvency Practitioner
In order to qualify to offer an insolvency service IP’s must pass pass the Joint Insolvency Examination Board (JIEB) exams. which happen every November.
Prior to taking the Joint Insolvency Examination Board (JIEB) exams, potential IP’s must first register with one of the professional bodies, such as the ICAEW.
Even after passing, insolvency practitioners in the UK are subject to regular inspection by the relevant professional body usually by a ‘spot check’.
Insolvency Practitioner Code of Ethics
A clearly defined code of ethics for insolvency practititioners is laid out here: https://www.insolvencydirect.bis.gov.uk/freedomofinformationtechnical/technicalmanual/Ch49-60/Chapter%2055/part3/part_3.htm
Briefly, IP’s are expected to demonstrate:
- professional competence and due care
- professional behaviour
Fees of an Insolvency Practitioner in the UK
IP’s are paid either as a fixed fee, on an hourly rate, or as a percentage of the money raised to pay creditors what they are owed.
A typical cost for the liquidation of a small business would be between £4000-7000 + VAT.
In the UK, the Insolvency Service is an executive agency of The Department of Business, Energy and Industrial Strategy (BEIS).
Regulation is overseen by the Secretary of State’s responsibility to oversee the whole insolvency industry in the UK.
Under the Insolvency Act 1986, the principle law governing insolvency services, certain recognised professional bodies (RPB) are authorised to licence their members as insolvency practitioners.
The Insolvency Act 1986 recognises:
- Insolvency Practitioners Association:
- BIS Insolvency Service
- Institute of Chartered Accountants of England and Wales
- Institute of Chartered Accountants in Scotland
- Institute of Chartered Accountants in Ireland
- Association of Chartered Certified Accountants
- Law Society of England and Wales
- Law Society of Scotland
- Law Society of Northern Ireland
The Association of Business Recovery Professionals, also known as R3, is the leading professional trade body for the insolvency sector in the UK.
Acting as a Liquidator
A company liquidator refers to an appointed licensed insolvency practitioner. It is their role to oversee the liquidation of a company from start to finish.
A liquidator can either be appointed by the shareholders or directors of a company (as in the case of a voluntary liquidation), or by the court (in the case of a compulsory winding up of a company).
Do You Need Immediate, Confidential Help?
Whether you are looking for insolvency practitioners in London, Birmingham, Manchester or elsewhere within the UK, you can speak with one of the team today about your company’s insolvency problems by calling us on 08000 746 757. Alternatively, use our live support feature at the top of the page to get answers fast.