17th June 2020
At Hudson Weir, we pride ourselves on our dedicated team of insolvency practitioners – but what IS an insolvency practitioner?
If you or your company are experiencing economic difficulties, a consultation with an insolvency practitioner might be the right step to help you through the situation.
If you’ve been given this advice but aren’t quite sure what an insolvency practitioner can do for you, you’ve come to the right place.
Read on to find out what an insolvency practitioner does and how they could assist you.
An insolvency practitioner is a licensed professional with a thorough understanding of accountancy and law, who can act on behalf of individuals or companies in financial distress.
Regardless of their governing bodies, insolvency practitioners need to acquire a minimum number of hours of insolvency experience.
They also need to demonstrate competence in every area of insolvency and comply with their RPB’s regulations, the law, Statements of Insolvency Practice (SIPs) and the Insolvency Code of Ethics.
The SIPs are a set of principles and key compliance standards with which insolvency practitioners need to comply in order to promote and maintain high standards of work.
An insolvency practitioner who takes insolvency appointments needs to have professional indemnity insurance, as well as a bond.
A bond, or security, is a legal requirement for the qualified insolvency practitioner. It acts as an insurance policy in case of any misappropriation of client funds by the insolvency practitioner. In other words, the bond is meant to protect people from the insolvency practitioner stealing the money in the case.
When a company has concerns about its viability to continue trading, or is approaching the end of its lifecycle (in an MVL), the board of the company should approach an insolvency practitioner for independent advice.
Consulting an insolvency practitioner enables company directors to protect their own position and ensure they are performing their fiduciary duties. As a director, you must act in the company and creditors’ best interest.
An insolvency practitioner can be appointed via different routes depending on the restructuring process in place. Depending on the situation, the insolvency practitioner can be appointed by the board of directors, the shareholders (in liquidations, administrations and MVLs), the creditors, the court or anyone with an economic interest in the company.
If an individual is suffering personal financial distress, an insolvency practitioner will act as ‘nominee’ to draft proposals to be passed by creditors and the insolvency practitioner will be appointed ‘supervisor’ in an individual voluntary arrangement.
Once appointed, the insolvency practitioner has a duty to protect the interests of people with economic interest in the company.
The insolvency practitioner will attempt to do this by restructuring the company. If restructuring is not possible, the insolvency practitioner will attempt to rescue the business as a going concern.
Should the rescue of the company be unachievable, the insolvency practitioner will wind up the company in order to sell assets and make payments to creditors.
Depending on the course of action in relation to the company’s restructuring process, an insolvency practitioner can act as:
So, what is an insolvency practitioner? We hope we’ve answered that for you.
If you have any concerns in relation to the viability of restructuring of your company, early engagement with an insolvency practitioner is key to ensure you protect your interests and those of the company.
If you would like to get in touch with an insolvency practitioner, feel free to contact us on 020 7099 6086 for a free consultation.
Hudson Weir are an established firm of Insolvency Practitioners who specialise in business recovery and corporate financial solutions. Hudson Weir provides industry leading, nationwide services for its clients with the intention of easing financial pressures and providing recovery strategies for struggling businesses.More about us
Hudson Weir Ltd (Company number 09477593) is a company registered in England and Wales.