An Insolvency Practitioner (IP) is a trained insolvency specialist who has a licence to practice in this field. This means they have the relevant exam certificates, experience in insolvency and have been approved by an insolvency regulator. Individual practitioners are regularly monitored by the latter.
Duties An Insolvency Practitioner Is Expected To Carry Out
An IP works with many competing stakeholders’ interests, but their main duty is to the company’s creditors.
They will work towards achieving the best possible outcome for the company’s creditors.
An IP will follow the statutory regulations in the Insolvency Act 1986 and the Insolvency Rules 2016. They must also comply with Statements of Insolvency Practice.
Investigating the affairs of each company is also a major part of the IP’s work. Where a director’s conduct has been unfit, the IP will submit a report to the Secretary of State.
IP as Liquidator
As liquidator, an IP has a duty to realise the company’s assets, agree creditors’ claims and distribute the funds between the company’s creditors.
The IP will also investigate the conduct of the directors in the time before the liquidation.
In a solvent liquidation (Member’s Voluntary Liquidation “MVL”) the IP has a duty to distribute the company’s funds between the company’s shareholders.
IP as Administrator
The duty of an Administrator is to achieve one of the following objectives:
1) Rescue the company as a going concern.
2) If the above is not possible, to achieve a better outcome for creditors than if the company was placed into liquidation.
3) If the above two are not achievable, to realise the company’s property with a view to paying secured or preferential creditors.
IP as CVA Supervisor
As a CVA supervisor the IP doesn’t run the company – the company directors remain in control – however he or she does supervise their actions and ensure the company is operating in accordance with the terms of the CVA. The IP will also distribute funds between creditors as agreed in the CVA proposal.
If you find yourself wondering which option would be right for your company, then please take a look at our free downloadable Guide to Business Recovery and Turnaround. Do get in touch if you feel you would benefit from some free professional advice.
If your business is in trouble - if you are facing creditor debts, HMRC debts, or struggling to meet payroll, then you could be facing liquidation. Can your business be saved? Download our free guide, 'What To Do When You Are Facing Liquidation' now.