What Do Insolvency Experts Do?

When a business is struggling with financial difficulties it’s often difficult to know where to turn. Whether your company is insolvent or close to it, the expert guidance of an insolvency practitioner could save your business and provide a path forward.

An insolvency expert (IP) is a licensed insolvency experts professional who helps companies and individuals deal with debt problems through various legal mechanisms including bankruptcy, liquidation, and Company Voluntary Arrangements (CVAs). IP’s have a wealth of experience, which they use to assess and support distressed businesses and individuals, and advise them on their options.

They have extensive knowledge of all aspects of the law, regulation and procedure surrounding insolvency and recovery. Their technical expertise, gained through training and experience is invaluable to clients who seek their advice. They also have a strong network of relationships with lawyers and other professionals, which they can use to support clients.

IP’s must be authorised to act by an authorising body and are regularly regulated to ensure they follow the rules. They are also supervised by recognised professional bodies and the Insolvency Service to ensure they are operating in a way which is lawful and fair to creditors.

During insolvency procedures, they are responsible for reporting back to creditors on how the process is progressing and what will happen next. They also help their clients create a repayment plan, if necessary, and work with their creditors to reach an agreement on how to repay their debts.

In addition to these duties, IP’s will also investigate company activities and affairs, evaluating directors conduct and looking through company records. They will make reports to the Insolvency Service where they suspect a breach of the law may have occurred.

They also have a number of other responsibilities including advising on, and taking appointments in, formal insolvency procedures such as liquidations, administrations, receiverships, and bankruptcy proceedings. They will often be asked to be involved in disputes between creditors and debtors, defending directors from claims brought by liquidators and acting as expert witnesses for lawyers representing creditor claimants and trade indemnity insurers.

If you are concerned your company is insolvent or close to going out of business it’s essential to involve an IP as soon as possible. This will help limit damage to the company and allow them to find a solution that works best for all parties. Depending on the option chosen, such as a CVA or liquidation, there will be costs involved, but these can be less than if a liquidation is forced by a creditor. Regardless of the option chosen, an IP will take a percentage of the funds available to creditors for their supervisory fee. This is usually built into the payment your company has agreed to pay creditors as part of the CVA or a fixed sum for a liquidation. The government have a searchable database that you can use to check an IP’s credentials before they are appointed. Using it can help you avoid working with unlicensed and rogue practitioners.