Businesses can find themselves in a wide range of predicaments where it might be necessary to seek the assistance of an insolvency practitioner.
Whether you’re currently facing financial issues or if you can predict that you will in the near future, their expertise is likely to be highly beneficial, often a legal necessity.
That being said, what exactly is an insolvency practitioner? That’s what this article is for, to give you an introduction to the role of an insolvency practitioner and help you to understand how they might help you.
Insolvency Practitioner Defined
An insolvency practitioner is an expert who specialises in undertaking insolvency appointments, in a capacity authorised by the court.
All individuals who are qualified will have undergone close scrutiny by the Joint Insolvency Examination Board (JBIEB) and as a result, you can trust that qualified insolvency practitioners tend to operate to a high professional standard.
In addition to the JBIEB, insolvency practitioners are monitored by a variety of other regulatory boards, which include the Insolvency Practitioners Association, the Solicitors Regulation Authority and the Institute of Chartered Accountants in England & Wales.
What Do Insolvency Practitioners Do?
Insolvency practitioners are there to assist and intervene where bad debt occurs, whether it’s on the scale of a company, partnership or individual.
Insolvency practitioners intervene to ensure that any of the negative effects associated with insolvency are kept to a minimum; their role is often to act as an arbitrator between creditors, stakeholders and companies.
What this means is that they’ll redistribute assets between the parties as appropriate, based on their expert legal interpretation of signed legal agreements and the relevant legislation.
More specifically, their job involves managing the insolvency process, which can take many different forms. This might include anything from assisting with individual voluntary arrangements (IVAs) to administering a company voluntary arrangement (CVA).
In some cases, they might even liquidate assets. It all depends on the individual case and what will work best to recoup as much debt as possible whilst also ensuring that jobs are saved where possible.
When Might You Need An Insolvency Practitioner?
There are lots of reasons why you might need an insolvency practitioner, but some common examples include:- voluntary liquidation – company administration – individual voluntary arrangements (IVAs).
An insolvency practitioner can advise on the best course of action for your particular circumstances and then help you to navigate the process if you do decide to proceed.
How Much Do Their Services Cost?
How much an insolvency practitioner charges will depend on multiple factors. In most cases, payment will be based on one of two structures: hourly and fixed fee.
Fixed fee work tends to consist of assistance of a mostly advisory nature, where it’s highly unlikely that the work will scale to massive amounts. Work that extends beyond this initial advice will normally be charged based on an hourly rate.
The exact amount that hourly-based work will end up costing will, of course, depend on how much work needs to be done and the insolvency practitioner in question’s hourly rate.
The amount of work that needs doing will vary massively, depending on factors such as the size of the organization that’s insolvent and how complex the credit arrangements are.
How To Choose The Right Insolvency Practitioner
The most important thing to consider when choosing an insolvency practitioner is to check that they are properly licensed and qualified. Once this is done, you need to see how good the service they provide is; ideally, you’ll find a provider with the perfect balance of technical expertise and personability.
Look at testimonials, and get an initial assessment session to see if you get along with their way of doing things. The assessment should be free, and the insolvency practitioner should also set out estimated fees in an engagement letter.
Common Questions Relating To Hiring An Insolvency Practitioner
Who Employs An Insolvency Practitioner?
Most of the time, it’s a company that will employ an insolvency practitioner when they are experiencing financial difficulties. This is done in an attempt to try and rescue the company as a going concern.
How Long Does The Process Take?
The length of time that the insolvency process takes will depend on multiple factors, including how much debt the company has and how many creditors are involved. In most cases, it will take several months to reach a conclusion.
Is It A Good Choice Of Career?
Working as an insolvency practitioner can be a rewarding career choice. It can be challenging and demanding, but it’s also interesting and provides the opportunity to help save businesses and people’s jobs.
What Are The Key Skills Required?
The key skills required for working as an insolvency practitioner include excellent communication, negotiation and problem-solving abilities. You will also need to be well-organised and have experience of working with financial information.