A licensed insolvency practitioner (IP) is authorised to act in relation to formal insolvency procedures, and they can be appointed in a number of ways. Insolvency practitioners generally have a financial (particularly accountancy) background, and are closely regulated under the Insolvency Act, 1986.
The route by which an IP is appointed varies according to the insolvency procedure being followed. Appointments could be made via a meeting of creditors, by the courts if a winding-up order has been granted, or by the Secretary of State if the official receiver so requests.
Begbies Traynor is available for appointment as office-holder. We are the leading corporate rescue and recovery practice in the UK.
Sometimes an insolvency practitioner will already be involved with a debtor company on an advisory basis. Depending on how creditors vote at their meeting, the existing IP may be retained, or they might choose to appoint someone else.
A meeting of creditors takes place during various insolvency procedures including Creditors’ Voluntary Liquidation (CVL), Compulsory Liquidation, Company Voluntary Arrangement (CVA), and Company Administration.
Responsibility for administering a case is adopted on the date of appointment, and if a new IP has been voted in, a handover of documents and information takes place to ensure continuity.
Under certain circumstances, and sometimes instead of holding a meeting of creditors, the official receiver will request that the Secretary of State appoints an insolvency practitioner. This will generally be the insolvency firm next in line on the rota of practitioners, unless there has been a creditors’ meeting and they have voted for a specific IP.
This IP rota lists local insolvency firms that accept appointment by the Secretary of State, and have expressed a wish to be included on the rota. In some instances they might be unable to act because they have represented the insolvent company before, in which case a note will be added as such.
It is the official receiver’s responsibility to ensure that all insolvency practitioners listed on the rota are licensed and authorised to accept such appointments.
When a winding-up order is granted by the courts, the official receiver automatically becomes the office-holder. But the courts can also become involved in office-holder appointments in other circumstances.
For example, when more than one insolvency practitioner has been nominated at the meeting of creditors, or a creditor has applied to the court for a different IP to be appointed than the majority nomination.
In many cases, appointing an insolvency practitioner is a director-initiated process. When a company director becomes aware that their business is insolvent, they have a duty towards creditors to protect their interests and place these above those of the company. Failure to do this could see the director being accused of wrongful trading.
By enlisting the help and advice of a licensed insolvency practitioner, directors are demonstrating their desire to do what is best for their outstanding creditors. A director of an insolvent company can appoint an insolvency practitioner to act as administrator in an administration process, as nominee and supervisor in the respect of a CVA, or as liquidator if the company is to enter a Creditors' Voluntary Liquidation (CVL).
As licensed insolvency practitioners, Begbies Traynor provides tailored advice and guidance to solvent and insolvent businesses around the UK. Our experts will guide you towards the best option for your business, and ensure that you fully understand your options.
We are the market leading business rescue and recovery firm with more than 80 offices nationwide, and offer an initial consultation free-of-charge.
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