What Is An Insolvency Practitioner & What Do They Do?
When a business becomes insolvent, they will instruct the advice of a licensed insolvency practitioner. What does an insolvency practitioner do and what’s their role in liquidation proceedings? The following short guide answers all.
What Is An Insolvency Practitioner?
A licensed insolvency practitioner is a professional who is authorised to act on behalf of an insolvent partnership, company or individual. They help businesses looking to rescue or close their limited company, as well as individuals looking to resolve personal debt issues. In order to become a licensed insolvency practitioner, individuals will need to have passed JIEB (Joint Insolvency Examination Board) examinations. Their work is regulated by the Insolvency Act 1986 and is subject to regular inspections by a governing body.
The exact role of an insolvency practitioner and the duties required of them will vary depending on the nature of their appointment. Providing advice to financially distressed companies, an insolvency practitioner will work with owners and negotiate with creditors to organise the shut-down, sale or rescue of a limited company. As such, they will have one of three roles depending on their appointment. These roles may include:
Liquidator: One of the main duties of an insolvency practitioner is to act as a liquidator for both insolvent and solvent company liquidations. In a Creditors Voluntary Liquidation (CVL) or a Members Voluntary Liquidation (MVL), the liquidator’s role is to organise the realisation / distribution of company assets and ensure all company affairs are wound up correctly and efficiently.
Administrator: In company administrations and pre-pack administrations, an insolvency practitioner will be appointed to negotiate with creditors in order to facilitate the sale, rescue or closure of a business.
Supervisor & Nominee: In a Company Voluntary Arrangement (CVA), the insolvency practitioner will act as both supervisor and nominee. A CVA is a binding contract that is negotiated between a company and its creditors to facilitate the repayment of liabilities over a specified period of time. As a ‘nominee’, the practitioner will be responsible for putting together a CVA proposal, before acting as ‘supervisor’ to oversee the agreement throughout the duration of the process.
When Should I Contact An Insolvency Practitioner?
You don’t need to wait until your company becomes insolvent in order to enlist the help of an insolvency practitioner. In fact, it’s better for your company to contact a practitioner at the first signs of financial distress. This will provide your company with a greater amount of options. Whilst liquidation may be the best path forward for your business, there may also be the option to recover the company through methods such as restructuring or administration.
If you have concerns about your business’ financial state, please don’t hesitate to get in touch with the team at My Liquidation for confidential advice. Our experienced team of licensed insolvency practitioners can talk you through the best options available based upon your business’ individual needs.
