An insolvency practitioner is a professional who specialises in helping companies and individuals who are struggling with financial difficulties. Their role is to advise debtors on their options and help them to come up with a plan to deal with their debts. They also work with creditors to negotiate and agree on a debt repayment plan. In some cases, they may also help to rescue businesses by taking on the role of administrator or working with directors to facilitate a company voluntary arrangement (CVA).
An IP’s decisions about what to do in an insolvent situation will be based on what process will achieve the best return for the company’s or individual’s creditors. In some situations, this may mean continuing to trade the business and selling assets, while in others, it could involve closing down the company and selling its assets or taking complete control of a company before it is closed down via a Members Voluntary Liquidation (MVL).
It is an important job, which is overseen by the government through the Department for Business, Innovation and Skills. IPs must comply with a number of statutory insolvency practitioner london requirements, as well as follow best practice guidance and ethical guidelines, which are set out in their licensing code of conduct.
When an IP starts to deal with a case, they will assess the situation and decide whether or not the individual is eligible for an Individual Voluntary Arrangement (IVA). They will then work with the individual to come up with an agreed proposal, which they will then submit to the courts for approval. Once this has been done, the IP will act as supervisor of the IVA, which will include collecting contributions, making distributions to creditors and reporting annually on progress. In addition, they will manage any breaches of the agreement and petition the court to wind up the company if necessary.
The other main role of an IP is to act as liquidator when a solvent or insolvent company goes into liquidation, such as via a creditor’s voluntary liquidation (CVL) or compulsory liquidation. In this case, the IP will maximise realisations by either selling off the company’s assets or closing down the business.
Insolvency practitioners are also required to carry out investigations into the activities of company directors and examine their accounts, as part of their role in ensuring that they are not involved in any wrongful or fraudulent activity. They are also required to report any suspected offences to the relevant authorities.
An insolvency practitioner’s fees can vary depending on the type of case and the complexity of it. For example, an administration fee is usually a fixed amount, while an investigation fee will be charged on a time cost basis. However, the party who initiates the formal insolvency procedure will be responsible for paying all associated fees. An IP will always provide an accurate breakdown of their fees when they take on a new case.