Insolvency Practitioner. – If your company suffers from financial difficulties, a meeting with an insolvency practitioner is wise to consider the best options available and protect the position of creditors and that of the directors. If unsure or never met an insolvency practitioner before, then you may be unsure what their duties and help they may offer, once you have appointed them to help your company. As a director, vital you understand the responsibilities of an insolvency practitioner and appreciate what they can add to your business.
A Licensed Insolvency Practitioner.
A licensed insolvency practitioner (IP) – authorised to act on behalf of individuals and companies. Usually, helping companies with financial issues.
An IP also helps directors of companies that remain solvent and wish to liquidate their company. A process referred to as a Members’ Voluntary Liquidation (MVL).
Usually, a director approaches an Insolvency Practitioner. So they then may deal with their company suffering financially from cash flow and or creditor pressure.
A Licensed Insolvency Practitioner – A Liquidator?
A Licensed insolvency practitioner acts as liquidator along with other roles. Decided on the type of appointment:-
– An insolvency practitioner will be appointed the administrator of a company in both administration and pre-pack administration cases. They will work to realise a better outcome for creditors whether this is through arranging a sale of the company or facilitating an ordered shutdown of the business.
– Acting as a liquidator in both solvent and insolvent company liquidations. The insolvency practitioner’s role remains to realise company assets and ensure distribution appropriately to creditors. In insolvent liquidations such as Creditors’ Voluntary Liquidations (CVLs), creditors typically comprise of suppliers, banks, and other lenders; in an MVL, which is the liquidation of a solvent company, the directors and shareholders who remain in line to receive the proceeds.
NOMINEE AND SUPERVISOR
– In Company Voluntary Arrangements (CVAs), an insolvency practitioner will take on the dual roles of nominee and supervisor. They will first act as a ‘nominee’ and remain responsible for putting together a viable proposal for the CVA. A Statement of Affairs (SOA) will be produced, and creditors informed how much they could expect to receive once the CVA approved. Then the insolvency practitioner will become ‘supervisor’ of the agreement and will oversee matters throughout the CVA. The ongoing performance of the business remains monitored to ensure the company keeps on track to complete the CVA and emerge with a good chance of enjoying a successful future.
Insolvency Practitioners – Regulated?
UK Insolvency remains regulated by the “Insolvency Act 1986“. Several recognised professional bodies, including ICAEW, IPA, and ICAS, adopt the same strict guidelines allowing IP’s to operate.
When Should I Contact An Insolvency Practitioner?
For many companies, appointing an insolvency practitioner happens when distress levels get to an unmanageable point, and directors find they can no longer continue with the current situation. An insolvency practitioner will then step in at this stage, assess the options, and recommend the best course of action.
An insolvency practitioner remains then more valuable to your company, the earlier you seek their advice. By contacting HBG ADVISORY during the initial stages of distress, you will be giving your company the very best chance of survival. A more extensive range of rescue and recovery options will be available to you including negotiating with creditors informally through a Time to Pay (TTP), or formally by way of a CVA. Left too late, then often the case that a complete shutdown in the form of a CVL remains the only realistic option.
Who appoints an insolvency practitioner?
- a creditor of the company,
- appointed by the courts,
- or directors of a financially distressed company.
Whoever initiates insolvency procedure remains liable for paying the fees.
However, if a creditor commences any insolvency proceedings against a company, therefore, the director receives a Winding Up Petition initiating the process of the company enforcing compulsory liquidation.
Usually, however, the director who approaches an insolvency practitioner first, favouring control of the procedure rather than having a practitioner appointed on the company by creditors through compulsory liquidation. ( Insolvency Practitioners always work with the interest of creditors no matter if the director appoints.).
IP’s offer guidance to directors initially but will always ensure creditors interests remain protected.
Insolvency practitioner cost?
Costs fluctuate depending on the procedure adopted. However, expect to pay around £4,000 for a CVL. Costs recovered by liquidating the company assets. However, in occurrences, where proceeds from the sale of assets deficient. Then directors remain accountable for paying fees.
Subject to the age of trading business and how directors remunerated themselves. Then they may claim redundancy, once liquidated.
CVAs, have a monthly supervisors fee lasting the time of the CVA. The fee forms part of the approved monthly contribution amount. The insolvency practitioner takes the amount, therefore, reduces the balance remains for the company creditors. Then the creditors agree to the supervisor’s fees.
Qualifications of an IP?
To be able to practice as a licensed insolvency practitioner. Exams set by the Joint Insolvency Examination Board (JIEB). Once passed, experience counts on dealing with complex issues and how commercially companies saved. Licences remain issued by various professional bodies and history of the [email protected] can be sought online as to fines and any disciplinary action.
Picking an insolvency practitioner?
Suppose contemplating liquidating your limited company, or seeking insolvency consultation. Then only approach a firm of licensed insolvency practitioners.
In the UK. Many trade as an insolvency specialist though neither qualified nor insured.
So, check the qualifications before asking for help.
Verification, however, remains simple. View the Insolvency Service Website.
To view our IP’s check out HBG Team.
Finding an Independent IP?
Often Accountants recommend IP’s. Take care.
- Ensure you note everything down in writing.
- Ask how much?
- If you have an overdrawn directors loan, understand your position.
- Ask to speak to previous clients.
- Has the IP’s a disciplinary track record.
- REMEMBER. TRUST REMAINS IMPORTANT. IF YOU HAVE ANY DOUBTS, MOVE ON. MEET ANOTHER IP.
For further information on our team at HBG Advisory checkout MEET THE TEAM