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Rescue and Recovery - How Insolvency Practitioners can save your business

What is a Licensed Insolvency Practitioner?

Insolvency Practitioners (IPs) are specially trained and licensed individuals, often accountants, who deal with business and personal insolvency. Insolvency Practitioners are regulated and trained by an authorising body, such as the Institute of Chartered Accountants in England and Wales.

Insolvency Practitioners are trained to give the best advice to directors and business owners who want to rescue their business before a formal insolvency procedure is needed. When appointed, an insolvency practitioner’s main task is to try and rescue the business, but if this is no longer possible their responsibilities are then to:

• Sell the assets of the person or company that owes money
• Collect money due to the person or company
• Agree creditors’ claims (and)
• Distribute the money collected after paying costs (source: ICEAW)

When should Insolvency Practitioners get involved?

Ideally Insolvency Practitioners should get involved at the first sign of trouble. If a business is struggling or approaching insolvency, IPs are contacted by either the business directors themselves or an Official Receiver (the Government). Third parties, such as Creditors (who are owed money by the business or individual) or Banks and Investors (who have a financial interest in the business) can also contact IPs to start proceedings.

Meeting with Insolvency Practitioners

When contact is first initiated, one of their first actions will be to arrange an introductory meeting to discuss the finer details and facts of the case.

To understand the level of insolvency a business or individual is in, the IP will seek to examine and review the financial position of the business or individual before explaining in detail the options that are available to them and recommending a course of action.

Why do you need an Insolvency Practitioner?

IPs are trained in all aspects of insolvency law and are able to provide businesses and individuals with advice that is best suited to their specific situation.

Understanding what can legally be achieved and getting the right advice early on is very important when rescuing a business. Business rescue is a complex and specialised area, and IPs have many years’ experience in doing this.

Options involved with business rescue include:

• Informal Arrangement: A process that allows a business time to pay its debts.
• A Company Voluntary Arrangement: A formal Court approved process that allows up to five years to repay all or part of the business debts.
• Administration: A court order to protect businesses, giving them the time to look at all of the options.
• Liquidation: Where the business will close and assets are sold off. This may mean that directors start afresh albeit on a smaller business scale.

In the case of insolvency, the best stories of success come from businesses and individuals that recognize the early signs of insolvency and seek advice straight away.

Insolvency practitioners will review all aspects of the case and suggest the appropriate course of action for the given situation. If you suspect your business may be insolvent, now is the time to seek advice from a licensed insolvency practitioner before it is too late.

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David Kirk of Kirks Insolvency has over 20 years experience of dealing with insolvent businesses and can help businesses steer a route through their financial problems. David has dealt with over 1,000 cases and is the author of The Insolvency Manual.

This was posted in Bdaily's Members' News section by David Kirk .