An insolvency practitioner is a professional who plays a crucial role in helping individuals and businesses facing financial distress by offering professional advice, negotiating with creditors, working with accountants, closing solvent businesses and guiding clients through an insolvency process.
They must be licensed (which is why they’re most commonly known as licensed insolvency practitioners – or IPs) and are regulated by a recognised professional body. This article explores the various responsibilities and roles of an insolvency practitioner.
Giving professional advice before insolvency
One of the primary roles of an insolvency practitioner is to provide professional advice to individuals and businesses facing financial difficulties. IPs help business owners and company directors understand their financial position, identify the causes of their financial distress and explore the available options to address their challenges. This may include advice on cost-cutting measures, restructuring the business or seeking alternative sources of funding.
As suggested by their title, an insolvency practitioner can also help you understand formal insolvency procedures and the potential consequences of each option. By providing this advice, IPs help clients make informed decisions about their financial future and, in some cases, help them avoid insolvency altogether.
Negotiating with creditors for informal agreements
If you’re facing financial distress, it’s often in the best interest of both you and your creditors to reach an informal agreement to resolve the outstanding debts. An insolvency practitioner has the experience needed to negotiate with creditors on behalf of your business.
An IP can use their knowledge of insolvency law to negotiate the best possible outcome for your business, helping you to reach informal agreements with your creditors to repay debts over an extended period or at a reduced amount.
These informal agreements can provide a lifeline for struggling businesses and individuals, helping to avoid the perceived stigma and financial consequences of formal insolvency proceedings.
Working with accountants
Licensed insolvency practitioners often work closely with accountants to help clients manage their financial affairs. IPs and accountants collaborate to prepare financial statements, analyse the client’s financial position and develop strategies to address their financial problems.
This collaboration ensures that you receive comprehensive advice on your financial situation, taking into account both your immediate needs and your long-term financial goals. By working together, IPs and accountants can guide you through the steps you need to take to overcome your financial challenges and return to a stable financial position.
Closing solvent businesses
We often handle the closure of solvent businesses. This can occur when the owners of a business decide to retire or when the business has fulfilled its purpose and is no longer needed. In these situations, an IP can help the business owners wind up their company in an orderly and tax-efficient way.
The process of closing a solvent business is known as a Members’ Voluntary Liquidation (MVL) and involves selling the company’s assets, settling any outstanding debts and distributing the remaining funds to the shareholders.
Should you choose to close your business using an MVL, the IP will play a crucial role by ensuring that all legal and financial requirements are met, and that the business is closed in a way that minimises any potential liabilities.
Guiding clients through an insolvency process
Of course, we also guide clients through the insolvency procedures such as liquidation or administration. Our involvement is a legal requirement and makes certain that the process is carried out in accordance with the relevant laws and regulations.
During the insolvency process, your IP acts as your representative, liaising with creditors, employees and other stakeholders to make sure their interests are protected. We also act as Liquidator, responsible for selling your company’s assets and distributing any proceeds to creditors.
More than closing businesses
In summary, licensed insolvency practitioners play a vital role in helping individuals and businesses navigate the complex world of insolvency. Our main goal is to help clients overcome their financial challenges and work towards a more stable financial future.
If you think your company could benefit from the advice of a licensed insolvency practitioner, our expert team is on hand to take your questions. We don’t have a call centre. Instead, when you get in touch you’ll speak to someone who has the expertise to give you the answers you need. We will explain the options and you will decide on the best way forward.
