How Hard Is It to Find a Licensed Insolvency Practitioner in the United Kingdom?

For any company or personal insolvency procedure or for the closing of a solvent business in the United Kingdom, it must be handled by a licensed insolvency practitioner (IP). But finding one that is able to handle your situation and that you can work with is another matter. However, there are several sources you can use to help you find a licensed insolvency practitioner in your area and specialises in your type of business or personal situation.

What is a licensed insolvency practitioner?

A licensed insolvency practitioner is someone that is qualified, licensed and authorised to act on behalf of an individual, partnership or company that is either insolvent. In most cases, insolvency practitioners work in a law firm, an accountant or a specialist insolvency practice. However, they are also required when a solvent company is being closed down, known as winding up..

To practice as a licensed insolvency practitioner, they are required to:

  • Have passed the relevant insolvency, or JEIB (Joint Insolvency Examination Board), exams;
  • Be licensed with one of the UK’s insolvency practice governing bodies, such as the Insolvency Practitioners Association (IPA) or R3, which gives them the authorisation to practice;
  • Have sufficient experience in handling insolvency work;
  • Meet the regulator’s strict requirements and prove they are ‘fit and proper’ to act as an IP.

To be able to provide insolvency practitioner services, they must be a member of, and licensed by, one of the UK’s recognised professional bodies, or RPBs.

There are five main RPBs in the UK that regulate and monitor licensed insolvency practitioners are:

  • The Association of Chartered Certified Accountants (ACCA).
  • The Insolvency Practitioners Association (IPA).
  • The Institute of Chartered Accountants in England & Wales (ICAEW).
  • The Institute of Chartered Accountants in Scotland (ICAS).
  • The Institute of Chartered Accountants in Ireland (ICAI).

In turn, the RPBs are governed by the Insolvency Service. Being licensed with an RPB gives the IP the authority to handle insolvency, bankruptcy and liquidation appointments in formal insolvency procedures, such as voluntary and compulsory liquidations, company administrations and receiverships, bankruptcy and individual voluntary arrangements, as well as solvent liquidations, i.e. winding up a solvent company.

When do I need a licensed insolvency practitioner?

A licensed insolvency practitioner is needed in any individual or company insolvency situation, as well as in winding up solvent companies using a liquidation procedure. They can be instructed by the individual or the company’s directors, the court can appoint them and they can be instructed by an insolvent individual’s or company’s creditors if the creditors are not happy with the IP that has already been appointed.

An IP may not always take the route of liquidation if, after assessing the individual’s or company’s position, they believe an agreed formal arrangement to pay the debts or to find a buyer for a company is a better option. They often work with individuals and companies with debt management help and solutions in order to avert the potential of liquidation or bankruptcy, which is considered a last resort.

However, suppose the decision is to revert to the last resort, i.e. bankruptcy, administration or liquidation. In that case, it is generally the same IP helping with debt management that also handles the bankruptcy/liquidation procedure. At this point, they are no longer acting on behalf of the debtor and must act in the best interests of the creditor(s).

An individual, partnership or company cannot enter bankruptcy, an IVA (Individual Voluntary Arrangement), compulsory liquidation, administration, receivership, a MVL (Members Voluntary Liquidation), CVA (Creditors Voluntary Arrangement) or CVL (Creditors Voluntary Liquidation) without having a licensed insolvency practitioner appointed.

  • Bankruptcy –In bankruptcy, the IP will often have to sell the individual’s assets in order to raise the necessary funds to pay their creditors. If this isn’t possible, the IP will negotiate an arrangement with the creditors.
  • IVA – the IP will act on behalf of the creditors to negotiate a voluntary arrangement between the individual and creditors whereby the debtor pays back an agreed sum on a regular basis through the IP.
  • Liquidation – there are several forms of liquidation for a company – compulsory (creditors force the company into liquidation through the courts), a CVL (the company makes the decision to close an insolvent company voluntarily before their creditors force them into that situation), or an MVL (the directors voluntarily close a solvent company). The IP is appointed to handle the process including the sale or transfer of any assets as well as negotiating with and paying creditors.
  • Administration – an IP will act on behalf of an insolvent company to try to find a buyer for the company.
  • Receivership – the IP is appointed to recover money lent by a ‘secured creditor’, such as a bank.

How to find a licensed insolvency practitioner

All licensed insolvency practitioners are registered in accordance with the Insolvency Act 1986. There are a number of sources where you can find an IP, including all the RPBs but note that their databases will only hold information for the IPs registered with them and not all qualified and licensed insolvency practitioners in the UK:

  • The Institute of Chartered Accountants in Scotland (ICAS).
  • The Insolvency Practitioners Association (IPA).
  • The Association of Chartered Certified Accountants (ACCA).
  • The Institute of Chartered Accountants in England & Wales (ICAEW).
  • The Institute of Chartered Accountants in Ireland (ICAI).

The Insolvency Service has an online directory of IPs where you can search for an IP using your town or county which will include their contact details and their associated authorising body. Again, it must be remembered that only IPs that have agreed to register their details will be listed.

Company or individual insolvency is not something that anyone wants to deal with; however, the sooner a financial problem is recognised, the sooner it can be dealt with and the more potential the company has of recovering.  If you are struggling with debt, are considering winding up a solvent company or declaring bankruptcy, contact Simple Liquidation for assistance.  For more information on how our professional insolvency practitioners may be able to help your business, contact us today.