The directors of a failing company are likely to approach an insolvency advisor or licensed practitioner initially, for advice on how to proceed. If a formal insolvency procedure is decided upon, they will need to appoint a licensed IP to administer it.
At this stage, company members vote on the insolvency practitioner’s appointment at their members’ meeting, after which a meeting of creditors is generally held. It is incumbent on all insolvency practitioners licensed by the government to act on behalf of creditors in any formal insolvency procedure, however.
Failing to do this is illegal, and as a creditor you have recourse to vote on the appointment of a new office-holder at your creditors’ meeting, if the majority feel the existing IP is not fully representing creditor interests.
Begbies Traynor is able to represent creditors at this meeting. We have vast experience in this role, and can act as office-holder should the majority of creditors vote against the current appointment.
The level of fees charged by insolvency practitioners can sometimes be the cause of dispute, but this is one of the issues addressed during a creditors’ meeting – agreeing and setting the IP’s remuneration.
Other problems can arise if the insolvency practitioner or advisor has promoted themselves as ‘director-friendly’ simply with a view to winning business via company liquidations. As we mentioned earlier, it is illegal to discount the rights of creditors during a formal liquidation process, and not to assume a duty of care to creditor groups.
Whilst it is reasonable to assume that any insolvency advisor or practitioner will offer guidance to company directors in times of financial trouble, licensed IPs must act in the best interests of company creditors as a whole.
If after the creditors meeting, you become dissatisfied with the IP’s conduct for any reason and wish to make a complaint, you should approach the office-holder in the first instance in an attempt to resolve the issue.
The Insolvency Service runs an online ‘Complaints Gateway’ should you remain unhappy after contacting the IP in writing, or in person. This ensures your complaint is viewed by the Insolvency Practitioner Services (IPS) department, and an investigator will be appointed to look into the situation.
Although the IPS will not step in with regards to specific insolvencies, and do not take disciplinary measures against an IP, if your complaint is upheld they will take all circumstances into account in their decision as to whether the IP should continue to be authorised.
If you are unhappy with the conduct of an IP, you can contact us. We have a network of offices around the country, and can represent your interests at creditors’ meetings. Speak to one of our licensed insolvency practitioners to find out how best to proceed.