What is an Insolvency Practitioner and Do I Need One?
Insolvency practitioners, also known as IP’s, are authorised to act in relation to an insolvent individual, partnership or limited company.
Licensed practitioners are often either accountants, insolvency specialists, or solicitors working within an accountancy or law firm.
Insolvency practitioners in the UK must hold a licence and have:
- Passed the insolvency examinations (JIEB exams);
- Gained experience in insolvency work;
- Satisfied an authorising organisation (also known as a regulator) that they are fit and suitable to act as an IP.
What is the Role of an Insolvency Practitioner?
Although their role differs slightly depending on the particular type of procedure, an IP’s basic duties are to realise company assets to the best of his/her capabilities.
This will involve a number of tasks, including dealing with the company 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.
An insolvency practitioner can manage any of the following formal insolvency procedures within their appropriate roles:
- Winding up Petitions
- Company Voluntary arrangements
- Creditors’ Voluntary Liquidation
- Individual Voluntary Arrangements
- Members’ Voluntary Liquidation
Insolvency Practitioners’ roles vary widely, depending on the situation of the company they are working with. As well as acting as simply an advisor to limited company directors, their roles include
In the role of the liquidator, the IP facilitates the closing down of insolvent companies and the sale of their assets for the benefit of creditors. Read our full article on what a liquidator does here.
IP’s working in the role of administrator will take a detailed look at the company situation with the intention of finding the best outcome for creditors. As an administrator they are looking to turnaround the company via streamlined practices and cost cutting.
As administrative receiver, the IP is working specifically in the interests of of a secured creditor such as a bank with the goal of recouping their debt in full.
Supervisor of a Company Voluntary Arrangement (CVA)
Company Voluntary Arrangements, which are structured payment plans agreed upon by company creditors, require the presence of an IP to formalise the agreement and secure the vote of the creditors. Read our full article here on CVA.
Who Appoints the Insolvency Practitioner?
An IP can be appointed by a company director, company creditors, and even the Secretary of State, in specific cases. How this happens will depend on the specifics of the case.
For example, where the courts have made a winding up order, the Official Receiver will automatically become what is termed ‘the office holder’, meaning the IP in charge of the case.
Who Does an IP Work for?
Although an IP is often hired by a company director, it’s important to realise that any insolvency practitioner has a responsibility to maximise the return for the company creditors. In some cases, this means that IP’s often have to investigate the affairs of the very company directors who hired them.
Are Insolvency Practitioners Regulated?
It’s 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, certain regulatory bodies are recognised to licence their members as IP’s.
- 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
How do I Become an Insolvency Practitioner?
IPs study hard for many years to obtain the necessary licence. In order to qualify they must pass the JIEB Exams which happen every November.
These challenging examinations are made up of three papers, all of which must be passed to obtain qualification. They cover:
- Personal Insolvency Issues
- Company Administrations
- Company Voluntary Arrangements
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’.
How to Find an Insolvency Practitioner
For many directors, a company accountant or lawyer is able to offer a recommendation. Since it’s important to find a licensed practitioner, HMRC has also created a handy tool to help you find one. You can see this by clicking here.
Our team contains some of the UK’s best Insolvency Practitioners and can advise you on the following insolvency processes; as well as recommend the most appropriate route for you and your limited company.
How to Choose an Insolvency Practitioner
Below is a list of traits to try and avoid when selecting an insolvency practitioner for your company:
- Payment of upfront fees without commencing work.
- Poor choice of professional agents, including valuers.
- Lack of responsiveness from the advisor once they have been paid.
- The advisor lacks the knowledge in relation to Redundancy and/or interactions with the Redundancy Payments Office.
- Lack of understanding in advising the directors’ on the full range of options available to the company e.g. Creditors’ Voluntary Liquidation, Company Voluntary Arrangements or Administration.
- Creditors are still phoning as the insolvency advisor has not dealt promptly with the aggressive creditors’ enquiries.
- We are part of an insolvency practice with regulated and Licensed Insolvency Practitioners, so you can be assured of the professional advice at all times.
- We deal with a large number of insolvencies across the UK and our team have many years’ experience.
Are Insolvency Practitioners and Company Liquidators the Same?
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).
A large percentage of directors assume that they need an insolvency practitioner or company liquidator straight away and this may not be the case. Depending on your situation it may be best to address several other aspects of the situation before engaging an insolvency practitioner as the company’s liquidator.
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.