Why Appoint an Insolvency Practitioner?
If you are insolvent the court may choose to appoint an insolvency practitioner to deal with your case rather than grant bankruptcy. You can approach an insolvency practitioner directly yourself, but you need to make sure that they are qualified and take on clients.
As a general rule, insolvency practitioners are qualified accountants or even solicitors but since the rules were changed in the mid nineteen eighties it is possible to become a practitioner by passing several exams. To date there are around 1,500 qualified and regulated Insolvency practitioners operating in the UK.
An insolvency practitioner primarily deals with the following scenarios:
- Liquidation
- Bankruptcy
- Deeds of Arrangement
- IVA's (Individual Voluntary Agreements)
- CVA's (Company Voluntary Agreements)
- Administrative Receiverships
- Administrations
When to use an Insolvency Practitioner
Under normal circumstances an insolvency practitioner deals with people in IVA (Individual voluntary agreement) by advising people who have serious money problems on the best course of action. They will deal with the creditors directly, thus removing the pressure of threatening phone calls and financial uncertainty. Their aim is to help their clients to become debt free, pay off creditors and if possible, avoid Bankruptcy.Apart from dealing with individual cases an insolvency practitioner can be appointed by the court to carry out the winding up of a company and are regulated by the Insolvency service. You will be interviewed and they will take over control of your company.
If the official receiver discovers that a large amount of money is owed they will then call in the insolvency practitioner, appoint them as liquidator or trustee and wind up the company as required.
Insolvency practitioners are paid out of money recovered during the winding up of the company and as such are able to decline the appointment if they feel there is not enough money in the assets to pay them. Under these circumstances the official receiver must continue to handle the case.
If a company is liquidating on a voluntary basis then an Insolvency Practitioner will always be appointed as the liquidator. This is also the case where the company is liquidating but is still solvent. They will be appointed by the members of the board. In other cases they will be appointed by the courts.
