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Licensed Insolvency Practitioners

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What is A Licensed Insolvency Practitioner

What is a Licensed Insolvency Practitioner?

If your company suffers from financial difficulties, a meeting with an insolvency practitioner is wise to consider the best options available and while protecting the position of creditors and directors. If you are unsure or never met an insolvency practitioner before, you may be unsure what their duties and help they may offer, once you have appointed them to help your company. As a director, it is vital to understand the responsibilities of an insolvency practitioner and appreciate what they can add to your business.

Please Read Further: ‘What is an Insolvency Practitioner‘.

Insolvency Practitioner

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 may then deal with their company suffering financially from cash flow and creditor pressure.

What does a licensed Insolvency Practitioner do?

Insolvency Practitioners assist limited company directors to either rescue or close their companies. Insolvency requires the use of an insolvency practitioner legally, whose tasks include:

  • Realising company assets;
  • Dealing with creditor claims;
  • Distributing realised monies to creditors;
  • Investigating directors conduct;
  • Striking the company of the register at Companies House

A Licensed Insolvency Practitioner – A Liquidator?

A licensed insolvency practitioner acts as liquidator, along with other roles. Decided on the type of appointment:-

ADMINISTRATOR

An insolvency practitioner will be appointed the administrator of a company in both company administration and pre-pack administration cases. They will work to achieve a better outcome for creditors, whether this is through arranging a sale of the company or facilitating an ordered shutdown of the business.

LIQUIDATOR

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, like Creditors’ Voluntary Liquidation (CVLs), creditors typically consist 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 oversee matters throughout the CVA. The ongoing performance of the business remains monitored to ensure that the company keeps on track to complete the CVA and emerge with an excellent 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 reach 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 give your company the greatest 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 a Company Voluntary Arrangement. Left too late, then often the only realistic option is a complete shutdown in a CVL.

Licensed Insolvency Practitioners – Who appoints an insolvency practitioner?

Appointed by:-

  • a creditor of the company, 
  • Appointed by the courts, 
  • Or directors of a financially distressed company. 

Whoever initiates an insolvency procedure remains liable for paying the fees. 

However, if a creditor initiates any insolvency proceedings against a company, 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 favours control of the procedure, rather than having a practitioner appointed on the company by creditors through compulsory liquidation. (Insolvency Practitioners always work with creditors, no matter if the director appoints.

IP’s initially 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 £3,000 for a CVL. Costs recovered by liquidating the company assets. However, in occurrences where proceeds from the sale of assets are 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 supervisor’s fee lasting the time of the CVA. The fee is part of the approved monthly contribution amount. The insolvency practitioner takes the amount, therefore, reduces the balance remains for the company creditors. The creditors then agree to the supervisor’s fees.

Qualifications of an IP?

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 the history of the [email protected] can be sought on line as to fines and any disciplinary action.

Picking Licensed Insolvency Practitioners?

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 the team at HBG Advisory.

Finding an Independent IP?

Often Accountants recommend IP’s.  However, call many and feel comfortable with them!

  • 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. 
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