Insolvency Practitioners are licensed professionals who can advise company directors when their business is experiencing financial distress or struggling to meet its debts. They can explain the options available, including whether the company may be rescued, restructured or, where necessary, placed into insolvency.
As an insolvency practitioner with over 14 years of experience, I understand the importance of choosing the right professional for your company’s circumstances. Before appointing a practitioner, there are several questions you should ask to make sure they are appropriately licensed, experienced and able to clearly explain the options available to you.
Questions to ask
Are you a licensed insolvency practitioner?
There is a key difference between an insolvency advisor, and a licensed insolvency practitioner. An insolvency practitioner operating in the UK must be authorised and regulated by a Recognised Professional Body. This means they must comply with professional, ethical and regulatory standards, including staying independent, acting with integrity and avoiding any conflicts of interest. The licence also means the practitioner is subject to monitoring and regulatory oversight by their licensing body, helping ensure their services continue to meet required standards.
To verify a practitioner’s licence, you can search for them on the Government website.
Some advisors may not be licensed, which you should approach with caution. While not necessarily malicious, unlicensed advisors are not subject to the same regulations as practitioners and cannot take formal appointment as a liquidator or administrator. If a liquidation or administration is needed, this means you would not be able to use the same individual for the formal appointment.
What costs are associated?
Before agreeing to proceed with any services, it is important to ask for a clear explanation of the costs involved and what those fees cover. Costs can vary depending on the procedure and complexity of the company’s affairs. When discussing costs, you should always ask:
- When payment is due and how fees are funded.
- Whether VAT and other costs are included in the quoted fee.
- If fees are fixed or time-based.
- Whether additional expenses may arise.
At Revive Business Recovery, our advice is free with no obligation to continue with us if we’re not the right fit for your business’s needs. To arrange an appointment, contact us here.
Do you have experience working with businesses in my sector?
Practitioners with experience in your company’s sector and industry are more likely to have a greater understanding of your situation and the options available to you.
Different sectors face different pressures, contracts, assets and obligations. Relevant sector experience is beneficial to an insolvency practitioner, giving them additional understanding of your sector’s pressures which might aid their services.
What options are available to me both short and long term?
Depending on your company’s situation, both short term and long-term options should be considered. For example, if your business cannot pay debts as they fall due but expects to receive sufficient funds from an upcoming contract, your practitioner should consider whether temporary arrangements or rescue options could provide the breathing space needed.
At Revive Business Recovery, we have spoken to many directors who initially believed liquidation was their only option but found that an alternative solution was available after taking advice. A capable insolvency practitioner should explain the realistic options available, including the advantages, disadvantages and likely outcomes of each, so you can make an informed decision.
What to look out for
Not all insolvency advisors are licensed practitioners. When your business is looking for support, it’s important that your provider provides honest, ethical advice, without advising one solution over another when it’s not right for you. Some instances to look out for before continuing with an insolvency practitioner are:
- Inability to confirm their licence and regulatory details.
As previously mentioned, a practitioner’s licence can be verified on the Government’s website.
- Inability to provide clear costings.
When facing financial difficulties, understanding all the associated costs of your practitioner, their structure, and how they will be paid is imperative prior to undergoing service with them.
- Provides advice and guaranteed outcomes without proper assessment.
A practitioner needs to understand the full picture of your company’s situation before presenting any potential solutions. If a practitioner does not ask detailed questions about your business or review the relevant financial information, they may not have enough information to properly assess your circumstances.
How to prepare for your practitioner
When meeting with a practitioner, you want to ensure you provide them with as much relevant information as possible so they can make informed recommendations. To do this, you need to ensure that all the information you provide to them is honest and factual, providing them with a full picture of your business’s situation. Documents to supply to your practitioner might include:
- Financial records and forecasts.
Including recent accounts, management figures, balance sheets and cash-flow forecasts.
- Information on company debts and creditors.
Including amounts owed, overdue payments and any legal or enforcement action.
- Documents detailing company assets.
Including property, machinery, stock and intellectual property, together with any finance secured against them.
- Director and shareholder details.
Including relevant ownership information and details of any director loan accounts.
- Information on any personal guarantees.
Including details of any company borrowing or obligations personally guaranteed by a director.
When speaking to your practitioner, be clear with your concerns. A licensed insolvency practitioner should provide impartial, informed advice based on the unique circumstances of your business.
For free, no obligation advice from an experienced insolvency practitioner, speak to the team at Revive Business Recovery.
