What Is an Insolvency Practitioner and What Do They Do?
When a company begins to struggle with unmanageable debt, cash flow issues, or creditor pressure, one of the most important people to speak to is an insolvency practitioner (IP). But what exactly do they do, and how can they help?
In this blog, we’ll explain who insolvency practitioners are, when to contact one, and how they can support both businesses and individuals in financial distress.
Who Is an Insolvency Practitioner?
An insolvency practitioner is a qualified professional licensed to act in formal insolvency processes. They’re regulated by recognised professional bodies (such as the ICAEW or IPA in the UK) and are authorised to manage situations where individuals or businesses can’t pay their debts.
They have the legal authority to take control of a business, negotiate with creditors, and oversee processes such as liquidation, administration, or voluntary arrangements.
What Can an Insolvency Practitioner Do?
Insolvency practitioners are trained to guide companies and individuals through financial difficulty. Depending on the situation, their role may include:
- Business Rescue and Recovery
Before jumping to closure, IPs assess whether a company can be saved through restructuring or negotiation. This might involve:
- Company Voluntary Arrangements (CVAs)
- Time to Pay arrangements with HMRC
- Refinancing or turnaround strategies
- Company Administration
If a business is insolvent but has potential for recovery or sale, an IP may recommend administration. This places the company under legal protection (a moratorium) while a plan is developed.
- Liquidation
If saving the company isn’t possible, an IP may lead:
- Creditors’ Voluntary Liquidation (CVL) for insolvent companies
- Members’ Voluntary Liquidation (MVL) for solvent companies closing down in a tax-efficient way
They’ll sell off assets, pay creditors in order of priority, and formally dissolve the business.
- Bankruptcy and Individual Voluntary Arrangements (IVAs)
IPs also work with individuals in serious personal debt, helping with:
- Bankruptcy processes
- Setting up an IVA to repay creditors over time while avoiding bankruptcy
When Should You Contact an Insolvency Practitioner?
If your company is:
- Unable to pay bills on time
- Receiving threats from creditors or HMRC
- Facing legal action like statutory demands or winding-up petitions
…it’s time to speak to an IP. The earlier you do, the more options you’re likely to have.
Why Use a Licensed IP?
Only licensed insolvency practitioners are legally allowed to manage formal insolvency procedures. Using an unlicensed advisor can lead to poor advice and missed opportunities to save your business.
Final Thoughts
An insolvency practitioner isn’t just someone who shuts businesses down—they’re problem-solvers, negotiators, and legal experts who can help you find a way forward when things seem impossible.
If your business is in trouble, don’t wait until it’s too late. Contact a licensed insolvency practitioner to get the right advice—and possibly give your company a second chance. Facing financial difficulties? A confidential chat with an insolvency practitioner at Keywood Group could be your first step toward recovery.
