If your business is facing financial difficulties, you could be in need of the services of a licensed insolvency practitioner. Licensed insolvency practitioners are highly skilled and qualified financial experts. They’re legally authorised to provide insolvency advice and act on behalf of companies, businesses and individuals in financial distress.
A licensed insolvency practitioner has the expertise to liquidate insolvent companies and instigate corporate turnaround plans, to administer companies in debt and more. In this article, we explain in more detail what a licensed insolvency practitioner is, and how they can help you or your company through financial difficulties.
Licensed Insolvency Practitioners
A licensed insolvency practitioner has the qualifications, skills and expertise necessary to legally provide insolvency advice and to act on behalf of companies, businesses and individuals in financial difficulty.
If a company is struggling to pay its debts and is facing the prospect of becoming insolvent, a licensed insolvency practitioner is there to help. The main aim of an insolvency practitioner is to help companies and individuals avoid insolvency and become profitable again in the future.
They achieve this by providing expert advice and by undertaking different roles, such as that of an administrator. They also work on corporate turnaround plans, provide long-term insolvency advice to business directors, and help individuals facing bankruptcy.
The role of a licensed insolvency practitioner is a varied one. While their primary aim is to save businesses and help them turn a profit, they are also qualified to liquidate companies in the worst-case scenarios. Here are a few of the most important duties of a licensed insolvency practitioner:
- Providing advice on matters concerning insolvency, with the main goal being to assist companies and individuals to avoid insolvency.
- Negotiating deals and repayment plans with creditors.
- Finding buyers for companies or assets, and helping to secure the best possible price in a sale.
- Collecting debts and assisting creditors to secure money owed to them by businesses or individuals.
- Administering companies in financial difficulty.
- Organising liquidations, including the distribution of money to creditors.
- Providing corporate restructuring or recovery plans to help businesses reorganise.
- Keeping to industry standards and abiding by laws and regulations, including the Insolvency Act 1986 and the Insolvency Rules 1986.
- Staying informed of ever-changing financial regulations, and new economic developments.
A licensed insolvency practitioner does much more than this, too. If you’re facing financial difficulty as an individual, business owner or corporate entity, they are here to help.
What Services Does A Licensed Insolvency Practitioner Provide?
You might be wondering how a licensed insolvency practitioner can help you if you or your business is in financial difficulties. Insolvency practitioners don’t just provide insolvency advice to businesses, but they offer a range of financial services that could help you to stay solvent.
The main services offered by an insolvency practitioner commonly include:
Let’s take a look at these services in more detail.
Company Insolvency Services
Insolvency practitioners work with companies and businesses to help them avoid insolvency and plan for the future. Insolvency practitioners provide advice to directors and they can help companies to reorganise their debts and payments using a range of insolvency tools.
A licensed insolvency practitioner can help with and organise the following:
- Company voluntary arrangements (CVAs)
- Administrative receivership
In any case, the first role of an insolvency practitioner is to save a business. For that reason, any experienced insolvency practitioner will first attempt to assist with reorganising debts and payments with creditors, usually in the form of a company voluntary arrangement (CVA). If this fails, a company can be placed under the direct control of an insolvency practitioner through the formation of an administrative receivership. This gives time to reorganise, restructure and hopefully save the company.
If all else fails, the business has to be wound up and liquidated, with assets sold in order to pay off debts. There are three main types of corporate liquidation that a licensed insolvency practitioner is qualified to oversee. These are:
In any event, liquidation is a last resort, as it results in the company ceasing to exist as it’s struck from the Companies House register.
Corporate Recovery Services
As well as helping companies to avoid insolvency in the short term, licensed insolvency practitioners offer expert advice and planning that assists with long-term corporate recovery. This can be in the form of insolvency advice or financial advice provided to directors, assistance with business planning, and help to restructure a company.
Here are a few of the most common corporate recovery services offered by insolvency practitioners:
- Advice to directors
- Business growth advice
- Corporate reconstruction
- Solvency planning
- Business turnaround
The goal of corporate recovery services is to help businesses plan to stay solvent, through forward planning, business diversification and, where necessary, streamlining or restructuring. Ultimately, if your business remains profitable, you have no need to escape from insolvency again.
Personal Insolvency Services
A licensed insolvency practitioner is not only qualified to work with companies and corporations, but they are qualified to work with individuals as well. On a personal level, insolvency practitioners can offer expert advice to anyone facing financial difficulties. If you’re overwhelmed with debts or can’t make credit card repayments on time, a licensed insolvency practitioner can help.
The main services offered include:
- Debt consolidation or reorganisation plans
- Individual voluntary arrangements (IVAs)
- Bankruptcy arrangements
Individuals often have many different avenues open to them if they are struggling financially, and insolvency practitioners can help to have debt consolidation plans enacted, or to source debt consolidation loans to help reorganise your finances.
They can also assist with individual voluntary arrangements (IVAs), a formal agreement between you and your creditors that can help you escape debt. As a final resort, insolvency practitioners can make the necessary arrangements for bankruptcy, which has its advantages and disadvantages. Bankruptcy is only ever suggested as a last resort, as the process has long-lasting consequences on your personal finances.
What Roles Can A Licensed Insolvency Practitioner Carry Out?
A licensed insolvency practitioner is not only authorised to provide advice on insolvency matters, but they are qualified to undertake a number of different roles relating to insolvency, too. The role they might take on varies from one situation to the next, but includes things like becoming an administrator or liquidator.
The most common roles include:
- Voluntary arrangement supervisor
Let’s explore these roles in more detail to understand the work a licensed insolvency practitioner carries out.
When a company is facing serious financial troubles, one way out is to enter into administration. The process of administration essentially buys time for the company, protecting them from being pursued by their creditors and allowing the business to be reorganised or restructured.
If a company enters into administration, the directors surrender all control over decision making to an appointed administrator, who is always a licensed insolvency practitioner. As an administrator, the insolvency practitioner oversees the company’s operations and endeavours to help them escape insolvency and become profitable once more.
If a company has become insolvent and all methods to escape insolvency have failed, the last remaining option available is liquidation. This results in a company winding up and being struck from the Companies House register after all assets have been sold in order to raise funds to pay creditors.
The liquidation process is always overseen by an appointed liquidator, and they are always a licensed insolvency practitioner. The liquidator helps to make the process as smooth as possible, finding buyers for assets and paying off as many creditors as they can. There are several different types of liquidation. In cases of voluntary liquidation, the company will hire the liquidator directly, while in compulsory liquidation cases the courts or creditors will appoint the liquidator.
Voluntary Arrangement Supervisor
Insolvency practitioners often assume the role of supervisor when it comes to reorganising debts for companies and individuals. These are generally known as voluntary arrangements, and they are essentially an agreement between debtors and creditors.
Voluntary arrangements are overseen by insolvency practitioners who ensure any documents are legally binding, and negotiate new repayment terms or debt consolidation loans that help the creditors get paid. The two types of voluntary arrangements are individual voluntary arrangements and company voluntary arrangements.
What Qualifications Does A Licensed Insolvency Practitioner Hold?
A licensed insolvency practitioner is a highly qualified individual, who will ordinarily be employed as such by a specialised insolvency firm. Insolvency practitioners are highly educated and highly skilled professionals, and they often hold several qualifications that allow them to excel in their roles.
To work as an insolvency practitioner, you must pass examinations set by the Joint Insolvency Examination Board (JIEB). This is a national body that helps to regulate the practice of providing insolvency advice, and passing the JIEB exams provides you with a licence to work as an insolvency practitioner.
Passing the JIEB examinations takes preparation and study, and many insolvency practitioners gain other relevant qualifications prior to this. Due to the financial nature of the work, many insolvency practitioners are also chartered accountants, for example, or hold degrees in business or finance.
Once the JIEB exams have been passed, licensed insolvency practitioners are required to work to the standards and policies established by the industry’s main regulators. The main governing body is the Insolvency Service, a government organisation that establishes the Insolvency Code of Ethics and which has the right to monitor insolvency practitioners. Standards are high and insolvency practitioners have to keep their skills and knowledge up to date throughout their careers.
How Do I Choose The Right Licensed Insolvency Practitioner?
If you’re looking for an insolvency practitioner to help you or your company through tough financial times, there are several key things to look out for. You should always ensure that an insolvency practitioner has the following:
- Licences: insolvency practitioners should always be officially licensed and qualified to provide advice. Check that they hold their JIEB and are authorised to work as an insolvency practitioner.
- Experience: the more experience your insolvency practitioner has, the more knowledge they have of financial matters. The more experience the better, so don’t be afraid to ask about their past work and successes.
In many cases, you can appoint an insolvency practitioner of your choosing to provide advice and make decisions on your behalf. If you are facing financial trouble, then an experienced, qualified and highly skilled insolvency practitioner can provide the expertise you need to escape insolvency, liquidation or bankruptcy.
In other cases, a licensed insolvency practitioner may be appointed for you. This is often the case if creditors are chasing you for payments, or if the courts have had to appoint an insolvency practitioner to oversee administration or liquidation proceedings. You should always seek impartial advice, and check if you can choose your own insolvency practitioner to oversee the case.
The cost of hiring an insolvency practitioner varies, as it depends on the amount of work being undertaken, the complexity of a financial situation, and more. In almost all cases, the cost to hire a professional is going to be more than outweighed by the expertise they bring to the table.
Contact Irwin Insolvency Today for Your Free Consultation
With decades of experience dealing with insolvency matters, our licensed insolvency practitioners can offer impartial advice and expertise to help you and your business through difficult times.
Irwin Insolvency offers a wide range of insolvency services, including corporate recovery planning, providing financial advice to business directors and organising insolvency arrangements.
If you or your company is in financial difficulty, don’t hesitate to contact Irwin Insolvency today for your free, no-obligation consultation.