How to Choose Choose Between Competing Insolvency Practitioners?
When the need for a voluntary liquidation (CVL) is realised, a Meeting of Creditors is called. One of the principal goals of this initial meeting will be to decide upon a liquidator. An Insolvency Practitioner becomes the company liquidator once appointed by the Meeting of Creditors. The situation can arise, however, that different creditors wish to elect their choice of a liquidator. In this kind of dispute, here are some things to bear in mind to help you all make the right decision.
Creditors can only appoint their liquidator if they have individually or as a group, 40% of the total company debt.
Consider your Specific Requirements
As with any professional, insolvency practitioners vary. Their fee structures vary, as do the personalities, levels of expertise, and experience. You need to find the liquidator who is the best fit for your company at that particular point: the individual that is going to find the best solution for your company.
Ask for Testimonials
If this person is going to help your company, then you should insist on seeing see proof that they have done that before, and that they have done it successfully. Ask to speak with former clients directly.
Insolvency Practitioner Rates can be a Significant Factor
Some insolvency practitioners charge a fixed fee while others charge an hourly rate. In either case, these costs can add up quickly, and while we’re not advocating you choose the cheapest, you will want to have a frank discussion with any potential candidates about their fee structure and how much the creditor’s voluntary liquidation is likely to cost. The size of the firm and the number of offices may also be a factor, with larger firms employing multiple staff of varying seniority. In these cases, senior IP’s will charge one level for their involvement in the case, while other parts are conducted at a lower rate by junior members of their team.
Ask your Accountant or Solicitor for a Referral
One of the more common routes to finding an insolvency practitioner is to ask your company accountant or lawyer. These individuals will usually have relationships in place and may be better situated to advise you on a reliable fit.
Talk to them Directly
Once the shortlist has been drawn up, it’s worth having a conversation to ascertain whether you feel that person is right for the job. For creditors finding themselves in the stressful situation of being owed money, there is often pressure to hire someone as quickly as possible. Although you do need to decide quickly, doing your due diligence now will make a huge difference to your stress levels as the process unfolds.
Membership of Professional Bodies
In the UK, the Insolvency Practitioners Association or IPA is the main membership body for liquidators. As a rule of thumb, your liquidator should be a member of this organisation, as it is a strong indicator of their level of expertise.