Several different terms are thrown around when your organisation is facing financial difficulty. An insolvency practitioner is one of the most common terms you are likely to see. If you have fallen on hard times, an insolvency practitioner can provide you with the help you need.
What Is an Insolvency Practitioner
Before we go any further, it’s first worth establishing what an insolvency practitioner is. These are officers of the court who are licensed by a regulatory body and can undertake formal insolvency appointments in the UK. These will be appointed whenever insolvency proceedings against your organisation are required.
How Do Insolvency Practitioners Become Licensed?
You need to make sure that you appoint Licensed Insolvency Practitioners only. An insolvency practitioner must become a joint Insolvency Examination Board member to obtain a licence. To do this, they need to pass different exams to demonstrate that they have the knowledge required to handle issues surrounding the financial affairs of different companies. Once these criteria are met, an individual is licensed. They can act freelance, but they will often work for a larger company.
If the insolvency practitioners you appoint are not licensed, they do not belong to a governing body and have not proven they have the necessary skills to deal effectively with your finances. If a practitioner does not belong to a governing body, they won’t be able to carry out certain duties, not to mention they will also not be court appointed.
Why Would You Hire an Insolvency Practitioner?
When you run a company, you need to take out different loans on behalf of your company to fulfil your purpose. You will need to pay these loans back using the money that your business eventually makes. On top of this, you will also have several other liabilities you need to settle and stay on top of. If there ever becomes a point where the money your business is making is not enough to keep on top of your liabilities, you will become insolvent. If other means of resolution cannot be found, then insolvency proceedings will be brought against you. This is where insolvency practitioners come into play.
An insolvency practitioner is responsible for minimising the effect of insolvency on different creditors and stakeholders whilst ensuring the company assets are all recovered to the fullest extent possible. They look out for every party involved and are impartial in their decision making, acting in accordance with different pieces of legislation.
If your company becomes insolvent, you would need to look for insolvency practitioners so they can take over your affairs, work with your creditors and stakeholders, and come to the most amicable outcome possible that benefits everybody. If you do not appoint your own practitioners, then they will be appointed for you by the Court.
What Does an Insolvency Practitioner Do?
An insolvency practitioner has two main roles. The first is to act as an advisor in the management of an insolvent estate. They will advise their clients about the different options available to them and what legislation is in place that will likely impact their situation.
Their second role is to manage the insolvent estate effectively. In doing this, they will need to act with two main objectives in mind. These are to identify all the different assets currently held by the insolvent business, and the second is to work out whether the insolvent company has engaged in any kind of misconduct, be it as a whole or a single individual. There are a number of different instances, particularly recently following loans handed out due to the pandemic. People have been mishandling money or spending company money on personal assets here. If this occurs, that individual could be fined and banned from running a company in the future.
When carrying out their duties, most insolvency practitioners will adopt a pragmatic approach to ensure that the most cost-effective solution is found throughout the process.
Who is Responsible for Appointing an Insolvency Practitioner?
There are several different ways that an insolvency practitioner can be appointed. Generally speaking, they are appointed by the company. However, this might not be allowed if the company has been acting wrongfully or their nominated practitioner has a vested interest in their organisation. Other people who can appoint a practitioner include:
- Company Directors
What Are the Powers that an Insolvency Practitioner Has?
There are a variety of powers that insolvency practitioners have, and how they use them will depend entirely on the nature of their engagement. Some of the standard powers that they will exercise throughout their appointment include:
- Applying to the court for different directions on what they should do in certain scenarios
- Apply to the court and ask them to compel a third party into providing information regarding the affairs and dealings of the insolvent company
- Selling and abandoning certain assets owned by the company
- Investigating the affairs of the insolvent company
- They can do everything that they see fit to deal with the particular affairs of the insolvent company
Do You Need Help from a Licensed Insolvency Practitioner?
If you are currently seeking the help of a licensed insolvency practitioner, then you must ensure you will be working with a company that keeps your best interests in mind and is qualified. At Simple Liquidation, our team of experts will be happy to work with you and your company to settle your liabilities effectively. If you have any questions or need any assistance, then do not hesitate to get in touch.