An Insolvency Practitioner (IP) is an officer of the Court.
Why early advice is essential
If a company is facing financial uncertainty, early involvement of an IP is crucial, as addressing financial distress promptly, gives the company the best chance of survival by exploring various options. They assess the company’s financial position and may negotiate with creditors to prevent insolvency.
How an Insolvency Practitioner (IP) can support recovery
An IP can assist in liquidating the company by selling assets or help settle outstanding debts and disputes. 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.
Who can appoint an IP
An IP can be appointed by the company or its directors, the courts, or a creditor.
When the Official Receiver is involved
The Official Receiver will be appointed as the IP upon the making of a winding up Order for a Company or a Bankruptcy Order for an individual, however a creditor can request for an independent IP to be appointed if they have sufficient creditor support.
Costs and approach of 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, a Company Voluntary Arrangement (CVA), or an Individual Voluntary Arrangement (IVA), depending on the situation.
Investigations and legal powers
An IP also has a duty to investigate the events leading up to the insolvency and they have various powers available to them to restore the position, such as reviewing Preference transactions, Transactions at Undervalue, potential Wrongful trading and Fraudulent trading claims to name but a few.
