A Brief Glossary Of Insolvency Practitioner Roles

If your business is deemed to be insolvent, then the law within the United Kingdom states that you have to employ a licensed insolvency practitioner (IP) to carry out formal insolvency proceedings. That much is common knowledge, but what an insolvency practitioner actually does (and can do) within your business remains something of a mystery for a great many. In this short guide we will present a few examples of what an IP is able to advise on and undertake appointments in, but first a short paragraph outlining the basic job of an IP.

An IP, once appointed to your business, will first attempt to rescue your business from insolvency. He or she will look at the books and attempt to work out if the business can be saved, if not, they will aim to sell the assets of your company. They will also collect any money due to your company, discuss and agree claims with your creditors and distribute the money collected after paying the costs involved. An insolvency practitioner will also work in the following areas, should they be called upon to do so:

– Bankruptcy: This is personal insolvency and happens when a person is not able to pay their debts. It will take most of their property (including belongings) and mean that they will be unable to act as a company director, only able to trade under their own name from then on. The money collected from the sale of their belongings will be shared amongst the creditors who are owed money. If requested, an insolvency practitioner can act as a trustee in the bankruptcy.

– Administration: A process of selling business assets in order to repay credits and rescue a business from complete liquidation. The IP will act as administrator during this period.

– Voluntary arrangement: A procedure which allows either a business or an individual to enter into an arrangement to pay back the debts they owe to their creditors. An IP will act as supervisor during these negotiations and make sure the agreed terms of the arrangement are kept by both parties.

– Liquidation: A procedure where the assets of a company are collected by an IP who will they sell them in order to pay creditors in a specific order. The courts can make an order for liquidation if a case if brought between them or a company can decide to put itself into liquidation voluntarily.

Those are just some of the things an IP can help you and your business, so don’t delay if you’re putting your business through formal proceedings.

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