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What is an Insolvency Practitioner?
An Insolvency Practitioner is an officer of the court who is licensed by an authorised regulatory body to undertake formal insolvency appointments within the United Kingdom.
In order to obtain an insolvency licence an individual must pass Joint Insolvency Examination Board (“JIEB“) exams to demonstrate that they have the required technical knowledge to carry out the role, and subsequently be granted a licence by a regulatory body, having met their criteria, which is usually based upon holding your JIEB qualification, having sufficient practical experience working the in the field, and the recommendation of established peers within the industry.
Insolvency Practitioners are currently licensed by the Insolvency Service (usually only government employees known as Official Receivers), the Institute of Chartered Accountants in England & Wales (“ICAEW“), the Insolvency Practitioners Association (“IPA“) and the Solicitors Regulation Authority (“SRA“). The Association of Chartered Certified Accountants (“ACCA“) previously provided licences, but now works in tandem with the IPA.
What does an insolvency practitioner do?
Insolvency Practitioners have two main roles – acting as advisors and in the management of insolvent estates.
As advisors, Insolvency Practitioners advise their clients, be they directors of distressed companies, private institutions such as banks, unpaid creditors, or individuals, on the options available to them within the scope of the insolvency legislation at the time.
As managers of insolvent estates, the Insolvency Practitioner has two primary objectives. The first is to identify all assets held by the insolvent entity – both actual, contingent, known and unknown, with a view to returning these funds to creditors in order of priority.
The second is to identify misconduct by the insolvent company/individual and report this misconduct to the Insolvency Service or any other relevant regulatory authorities to consider if it is in the public interest to take action against the directors of the insolvent companies, or the individuals, in light of their conduct.
In all dealings, an Insolvency Practitioner will adopt a pragmatic and commercial approach to his dealings to ensure that the most cost-effective resolutions are achieved for all stakeholders.
Is an insolvency practitioner the same as a liquidator?
Yes. Only an Insolvency practitioner (or an Official Receiver licenced by the Insolvency Service) can act as a liquidator in the UK.
What is a Liquidator?
A liquidator is a name used to refer to an Insolvency Practitioner who has been appointed over a company in liquidation. On consenting to act and obtaining the appointment as liquidator, the Insolvency Practitioner has the power to deal with the business and affairs of the company.
The liquidator’s powers include the ability to disclaim onerous or toxic assets, conduct investigations into the dealings of the company and its officers, and pursue litigation aimed at restitution for the company.
What qualifications does an insolvency practitioner have?
A licensed insolvency practitioner will always hold their Joint Insolvency Examination Board (“JIEB”) qualification. To practice as an insolvency practitioner, you must have passed your JIEB examinations, which covers personal and corporate insolvency legislation and other regularly relied upon legislation, such as the Companies Act 2006.
Whilst this is the only qualification required to practice as an insolvency practitioner, many insolvency practitioners have an accountancy background and, therefore, may be ACA or ACCA qualified chartered accountants. Usually, experienced staff of the insolvency practitioner will hold their Certificate of Proficiency in Insolvency (“CPI”), which underscore their competence in discharging day-to-day case work.
Some solicitors who specialise in insolvency work may obtain their JIEB qualifications and, in turn, their insolvency licence to underscore their knowledge and experience in the field, although usually they do not take appointments and continue to act as legal advisors to companies, individuals, and insolvency practitioners prior to and upon appointment.
Who Appoints an Insolvency Practitioner?
Insolvency practitioners can be appointed in several different ways depending on the insolvency process, but most commonly, they are appointed by:
- Individuals
- Company Directors
- The Company
- Shareholders and
- Creditors
Usually, one of the above will have sought advice from the insolvency practitioner regarding a company or individual and will have concluded that appointing an insolvency practitioner is in the creditor’s or their own best interests. Ultimately, the insolvency practitioner, when appointed, acts for the benefit of all creditors.
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