A number of different people are involved in the running of a company and the same can be said for the closing (or potential closing) of a company as well. A fundamental role in the closing of a company is that of a corporate insolvency practitioner.
Insolvency practitioners are professionals who are appointed to act on behalf of companies (and also individuals) when they are in acute financial distress. It is their responsibility to become familiar with their client and their financial position in order to understand the situation they are in and provide support throughout the liquidation process so a fair outcome for both the creditors and the company can be achieved.
There are several responsibilities appointed to an insolvency practitioner which allows them to carry out their role. These are going to be discussed in more detail below.
The Definition of Corporate Insolvency Practitioner
The court is responsible for appointing corporate insolvency practitioner who needs to deal with either a company or an individual who is unable to pay their debts. An insolvency practitioner has the authorisation to act as they have powers appointed to them by the Insolvency Practitioners Association. They have gone through training and as such have the ability to deal with various challenges that the insolvency, administration and liquidation process might throw up. They are able to outline the options which are available to businesses and individuals so that they can make the best decision on how to move forward.
The Responsibilities of Corporate Insolvency Practitioner
Professional insolvency practitioner has a number of different responsibilities that they will use in order to do their job properly and come to a good outcome for both the business and the creditors. The primary obligation of an insolvency practitioner lies with the creditor. Still, they can consider how certain decisions will impact a business as well, especially if a business is thinking about trying to restructure or come back from insolvency. Some of the most important responsibilities of an insolvency practitioner include but are not limited to:
- Providing Advice
One of the main functions of an insolvency practitioner is to provide advice to both businesses and creditors. The role is a supportive one and one of the most effective ways that businesses in this situation can be supported is by having access to the best support available. Insolvency practitioners work closely with the director of the company or the sole trader in order to create a plan which can either save the business or liquidate the business so that the funds can be used to pay off creditors. An insolvency practitioner can help a company avoid bankruptcy, or alternatively, if people are considering bankruptcy then they can offer advice on the best way to go about doing this. They will explain different options and offer the best advice possible, whilst also providing recommendations on the best way forward.
- Engaging in Negotiations with Creditors
An insolvency practitioner can also negotiate with creditors on behalf of the company with the intention of agreeing on a payment plan which will make sure creditors receive all of the money they are owed. Some payment plans will make it so that a company can continue trading and make a plan so that they can potentially stop themselves from closing completely. If a business can avoid insolvency and continue trading then this is better for the creditors in the long run because the odds of them getting their money back in full increases. When they are negotiating with creditors, insolvency practitioners will consider the following:
- Are the creditors in question legitimate?
- Are the demands put forward by the creditors reasonable?
- What bargaining position is the creditor in?
- How much will the creditor be able to reduce their demands by?
- How much is the company currently able to pay?
- Selling Off a Company’s Assets
If a company needs to make money quickly then one of the most effective ways that they can do this is by turning their capital into liquid cash, and the best way to do this is by selling off their assets. An insolvency practitioner can help with this by evaluating what a company has in terms of assets, and what these assets are worth and then marketing said assets to a range of different buyers in order to get the best price possible. The money made can then be distributed by the company to satisfy some of the outstanding liabilities that are owed to the creditors. This is a really important step if a company is going insolvent and even in cases where an insolvency practitioner is attempting to save a company.
- Reporting Back to Creditors
Creditors cannot be kept in the dark during the liquidation process, organisations such as banks have a right to information about their debt, which forms a part of the financial recovery process. As such, insolvency practitioners will always report back to creditors throughout the insolvency process to keep them updated on how the process is going and what they can expect throughout the next few weeks and months. As stated earlier, an insolvency practitioner’s primary responsibility is towards creditors, meaning that they need to keep them informed about the entire process. A lot of creditors might want money quicker or be a bit harsher with businesses, but if they are kept in the loop about everything that is happening then they are more likely to be patient.
Do You Need a Good Corporate Insolvency Practitioner?
As can be seen from the above, if you are going through the insolvency or liquidation process then it is incredibly important that you have a capable insolvency practitioner on board. If you need a good insolvency practitioner then you should be sure to reach out to Simple Liquidation. If you require any kind of further information or have any questions then do not hesitate to get in touch.