Can I replace my Insolvency Practitioner?

How to remove a licensed Insolvency Practitioner

An Insolvency Practitioner (IP) is a licensed professional who advises on and administers formal insolvency procedures in the UK. When a company has debts it cannot pay, it is the IP’s job to minimise the impact on the creditors (parties it owes money to) and administer an appropriate procedure - be it Liquidation, Administration or a Company Voluntary Arrangement (CVA) - in line with the relevant legislation. 

Insolvency Practitioners are highly qualified and have sufficient practical experience to work in the field. However, that doesn’t always guarantee a good experience. If you’re not happy with the service you’re receiving from an Insolvency Practitioner, you may be able to change or remove them but it can be a complex process. 

Here we discuss your options and the steps you can take to replace an Insolvency Practitioner (IP). 

Who can replace an Insolvency Practitioner?

The directors and shareholders of a limited company entering an insolvency procedure can look to remove an IP if they are unhappy with the service or advice they are receiving. The company’s creditors may also wish to change the Insolvency Practitioner if they feel they are not properly protecting their interests or the relationship has become strained. 

Can I replace an Insolvency Practitioner before the procedure begins?

As a company director or shareholder, the stage of the insolvency process determines how easy it is to change your Insolvency Practitioner. Switching should be straightforward if you are yet to officially appoint or sign a letter of engagement with your IP. 

It could be that you’re not happy with the initial advice you have received and are uneasy about progressing, or feel there are factors they have not fully considered when making recommendations. 

Whatever the issue, if the procedure hasn’t started, you can call a new Insolvency Practitioner to discuss your circumstances - reputable IPs do not charge for the first consultation - or meet in person if you’re more comfortable talking face to face.   

Can I change my Insolvency Practitioner after the procedure has started?

Once you have signed a letter of engagement and committed to a formal insolvency procedure with the IP, replacing them becomes more difficult. That’s particularly the case if you are a director of the company rather than a creditor. In this instance, there are three potential routes you can take.

Ask the Insolvency Practitioner to leave

The simplest approach is to write a politely worded letter to the IP you have appointed asking them to leave the post and explaining why. They’re under no obligation, but if relations between you have soured or the IP cannot administer the procedure effectively, they may agree to leave voluntarily. You can then search for a new Insolvency Practitioner. 

Initiate a decision procedure

This route is open to the company’s creditors but not the directors and shareholders. The process itself is relatively simple. The creditors vote on whether they want to remove the IP. If 25% of the creditors (by value) vote in favour of removal, they can look for and appoint a replacement. Crucially, the 25% of creditors who vote to change the IP must not include creditors who are connected to the company. 

Apply to the court

Company directors, shareholders and creditors can apply to the court to request an Insolvency Practitioner is removed from office. However, this is not an easy option. The court will not remove an IP without ‘just cause’ as the cost and time associated with getting a new liquidator or administrator up to speed is substantial. Therefore, you must have sufficient evidence to support your application, and the reality is that many court applications to remove an Insolvency Practitioner are unsuccessful.

The question is what constitutes ‘just cause’. Not seeing eye to eye with your IP or having them chase you for the repayment of an overdrawn director’s loan account is insufficient grounds to replace them. Instead, there must be some form of material misconduct or improper behaviour in their administration of the estate or work that’s not carried with the necessary vigour. The burden will be on you to demonstrate why the IP should be removed and you will need robust evidence.

How can I complain about an Insolvency Practitioner?

Creditors, debtors, employees, directors and shareholders of the insolvent company can all complain about an Insolvency Practitioner and their staff if they are unhappy with their work. Being unhappy with the outcome of an insolvency procedure is not sufficient grounds for a complaint. However, if the IP has shown bias or acted unprofessionally or unethically, you are within your rights to complain. 

There are three steps you can take:

• Complain to the Insolvency Practitioner directly - The first step is to make a formal complaint to the IP in writing or by phone. They will investigate your complaint and conclude whether it’s justified. They’ll rectify the error as much as possible if they accept it or explain why if they determine it’s baseless.
• Complain to the Insolvency Service’s Complaint Gateway - If you are unhappy with the IP’s response, you can escalate your complaint to the Government’s Complaint Gateway. It will assess the complaint and pass it to the authorising body your IP is registered with. The authorising body will investigate the complaint and issue sanctions against the IP where appropriate.
• Complain about the Insolvency Service - If you are still unhappy with the response you receive or the way your complaint has been handled, you can complain to the Insolvency Service by emailing them directly at: [email protected] or calling the Insolvency Enquiry Line on 0300 678 0015.  

Regardless of the outcome of your complaint, be aware that it will not necessarily lead to the removal or replacement of the Insolvency Practitioner and their actions may not be undone.  

How we can help

At Begbies Traynor, we cannot help you remove an Insolvency Practitioner you have already appointed. However, our licensed Insolvency Practitioners can provide honest, impartial and immediate advice and support if you are yet to commit to an IP and are looking for a replacement. Contact our team for a free, same-day consultation or arrange a meeting at one of our UK-wide offices.