If your business is currently having financial issues, you might consider hiring a professional insolvency practitioner which can help to levitate the status of the current position of your business. Unless you already experienced to hire an insolvency practitioner before, of course, you’ll have an idea on what they do and what their responsibilities with assisting your business’ financial distress.
However, if you’re a business owner and this is your first time facing this kind of financial distress, it is essential at your end to have a piece of knowledge about the jobs and duties of an insolvency practitioner. It is important for you to understand the importance of hiring them and what could be the possible solution they can give to solve your business financial issues.
Insolvency Practitioner: What Is It?
Insolvency practitioner or commonly known as IP is an individual who is expert and licensed to act as a middleman on behalf of a certain company that is currently facing an insolvency issue and financial distress. An IP will provide a solution and will lend a hand to a company’s directors who opted to dissolve their company by the process called “Members’ Voluntary Liquidation (MVL)” to uproot held profits.
In some major scenarios, a company director will hire an IP and engage their solution to solve the issues with the distressed company. In the process of the compulsory liquidation asked by the company director, the court will authorize an Official Receiver who is responsible for the provisional liquidating process – provisional liquidator. During the process, a company director may also request to hire an insolvency practitioner on their behalf to supervise the liquidation process.
Does Insolvency Practitioners and Liquidator Have The Same Responsibilities?
A liquidator is part of insolvency practitioners roles, depending on the exposition they need to deal with. The following are the most common roles of an IP that concerns with the financial issues of a certain company:
- Liquidator: If an insolvency practitioner act as a liquidator, it means they need to assess the company’s assets and make sure that these assets are distributed accurate and evenly to the creditors. In some cases of liquidations such as CVLs (Creditors Voluntary Liquidations) creditors typically encompass the suppliers, lenders, and banks. On the other hand, liquidation such as MVL (as stated above), directors and shareholders are usually to receive the held profits.
- Administrator: If an insolvency practitioner act as an administrator, one of their duty is to assess a great outcome for creditors regardless if it is done through a sale of the business or expediting ordered discontinuation of the business.
- Nominee and Supervisor: If an insolvency practitioner acts as a supervisor or a nominee, they’ll act as a nominee first and will be accountable for summarizing the proposed solution for the CVA (Company Voluntary Arrangements). Therefore, an SOA (Statement of Affairs) will be generated and creditors will be automatically informed on how much they could possibly earn once the CVA will be implemented. If the CVA method will go as smooth as it is, the insolvency practitioner will become the supervisor of the overall agreement. He or she will again assess the issue throughout the whole process of the CVA.