What is an insolvency practitioner?

If your limited company is struggling right now and may have to close down then you are going to come into contact with an insolvency practitioner.

An insolvency practitioner is a person in the UK who is licensed to help businesses and individuals with debt problems.

They may be called IP’s, short for insolvency practitioner or a liquidator.

If a business is insolvent and needs to be liquidated or rescued in an administration or CVA (Company Voluntary Arrangement) then a licensed insolvency practitioner will need to be appointed to oversee the procedure.

There are not many IP’s in the UK, considering there is 5.6 million businesses and 60 million people there are just only around 1700 licensed insolvency practitioners and not all of these are currently practising.

Once appointed, an insolvency practitioner is duty bound to represent the interests of the company’s creditors. They have strict code of conduct that must be adhered to and they have regular compliance checks to ensure these standards are being upheld. When choosing an insolvency practitioner make sure they are regulated by one of these bodies:

  • Insolvency Practitioners Association (IPA)
  • Association of Chartered Certified Accountants (ACCA)
  • Institute of Chartered Accountants in England and Wales (ICAEW)
  • Institute of Chartered Accountants in Scotland (ICAS)

What does an insolvency practitioner do?

The role of an insolvency practitioner is to look at all the options of an insolvent company to make sure the most appropriate option is taken.

Their roles include:

  • Selling assets of the insolvent business if they have any
  • Collecting money that’s due into the company
  • Dealing with all the creditors of the company and assessing their claims
  • Distributing the money to creditors once it has been collected in
  • Conducting a director’s investigation on the 3 years leading up to the company failure
  • Reporting the directors conduct to the insolvency service post liquidation

When do you need an insolvency practitioner?

As soon as a company becomes insolvent it’s important that you take advice as early as you can.

The easiest way to define insolvency is “you can’t pay your debts when they fall due”

By taking advice early you are acting within your director responsibilities which means there may be other options that are available to the company.

I hope this has been helpful – any questions please let me know.

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