An Insolvency Practitioner (IP) is an officer of the Court.
Why early IP involvement matters
When a company first faces insolvency, it is highly recommended to appoint an IP. Early involvement of an IP is crucial, as addressing financial distress promptly gives the company the best chance of survival by exploring various options. An IP can assist in liquidating the company by selling assets or help settle outstanding debts.
When should an IP be appointed?
It is best to appoint an IP as soon as financial distress is noticed, allowing for timely action that increases the company’s chances of recovery. An IP can be appointed by the company, the courts, or a creditor. They assess the company’s financial position and may negotiate with creditors to prevent insolvency. If recovery isn’t possible, the company will need to file for an insolvency process, where assets are liquidated, and proceeds are distributed to creditors.
Cost and purpose of appointing an IP
The cost of an IP varies depending on the complexity of the case and the time involved. It’s important to note that an IP’s role is not solely to push the company into insolvency; they explore all available options to avoid it. These options may include bankruptcy, liquidation, a Company Voluntary Arrangement (CVA), an Administration or an Individual Voluntary Arrangement (IVA), depending on the situation.
