The term Insolvency Practitioner refers to a person who is authorized by a creditor to undertake actions on behalf of a client who is unable to meet his financial obligations. In the United Kingdom, a licensed or authorized insolvency practitioner can be appointed for the express purpose of handling insolvency matters. Insolvency practitioners are professionals who have been approved as being able to practice insolvency in accordance with the UK Insolvency Practitioner Regulations 2021. These regulations were introduced to protect consumers and provide them with greater confidence about the use of insolvency practices. They also aim at protecting the rights of creditors who have an interest in ensuring that the client does not file for bankruptcy.
In the United Kingdom, it is not compulsory for an individual to obtain the services of an insolvency practitioner under the Insolvency Act 1979. He may appoint someone on his behalf either by going through a professional broker or approaching a bank. However, in England and Wales, it is necessary for an individual to ensure that he appoints the appropriate practitioner under the regulations laid down by the Insolvency Practitioner Regulations 2021. This includes appointing an ira representative. In addition, an individual may also refer to a local practitioner.
Under the Insolvency Practitioner Regulations 2021, you must appoint one person who has been approved as being qualified to carry out the duties of the Insolvency Practitioner. If you appoint an insolvency practitioner who is not entitled to the designation, he will be declared persona non grata and may not perform the duties of his office. Under the Insolvency Act, the following individuals can act as insolvency practitioners: an attorney or barrister practicing in England and Wales, or a solicitor in England and Wales designated or permitted to practice as such in that province; a registrar of insolvency, or an official of the insolvency office in England and Wales; or an approved insolvency practitioner. An official of the insolvency service is not allowed to act as an Insolvency Practitioner except for two years after he has become registered.
The purpose of appointing an insolvency practitioner is to take control of an organization and to carry out the wishes of the Insolvency Practitioner. For instance, the ILS creates an order under sections 4(5) and 5(5) of the Insolvency Act. The order states that an Insolvency Practitioner has to take over the management and administration of an insolvent company and that the Insolvency Practitioner must carry out his duties under the order. Normally, an ILS authorizes three kinds of management and administration: members’ voluntary liquidation, creditors’ voluntary liquidation and compulsory liquidation.
Members Voluntary Liquidation: This type of arrangement involves a company voluntary arrangement between a creditor and an Insolvency Practitioner. Under this agreement, the Insolvency Practitioner and the creditor agree that they will jointly manage the debts of the company and that the Insolvency Practitioner will report to the creditor on behalf of the Insolvency Practitioner. Members Voluntary Liquidation require that the company make an application to the Insolvency Practitioner for inclusion in the liquidation register. Once in the register, the Insolvency Practitioner can commence liquidation. However, the Insolvency Practitioner may also choose to declare the company bankrupt instead of going through a member’s voluntary liquidation.
Creditors Voluntary Liquidation: Under a creditors Voluntary Liquidation, the Insolvency Practitioner appoints a trustee to oversee the liquidation of the creditors’ assets. An Insolvency Practitioner can either be a member or a registered insolvency practitioner. The trustee will manage the distribution of assets amongst the creditors. When a creditors Voluntary Liquidation is undertaken, the trustee becomes the receiver of all outstanding debts of the company. Insolvency Practitioners cannot appoint their own receivers.
Both members Voluntary and creditors’ Voluntary Liquidation differ in that the insolvency practitioners have wider access to the assets of the company under both agreements. Insolvency Practitioners are also permitted to carry out their own investigations as regards to the solvency of the company. Another difference between a member’s voluntary liquidation and an ips is that neither agreement requires the Insolvency Practitioner to carry out any investigation of the solvency of the company. Members voluntary liquidation requires that the Insolvency Practitioner carry out an investigation prior to the making of any decision to engage the services of a self-regulating insolvency practitioner.
As an Insolvency Practitioner one will be called upon by the administrator to provide his/her professional advice and assistance to the Insolvency Practitioner. The duty of the Insolvency Practitioner is to assist the company to make the best possible arrangements for its best interests under the Insolvency Act 2021. In order to do this the Insolvency Practitioner must take all actions in relation to the assets of the company very seriously.