Everything you need to know about insolvency practitioners

insolvency practitioner

With our expert knowledge, we have compiled a list of frequently asked questions relating to insolvency practitioners. This article will cover everything you need to know.

What is an insolvency practitioner?

An insolvency practitioner (IP) is an individual who is licensed, to advise people and companies approaching an insolvency situation.   

These individuals are appointed to a company or individual under financial constraints. An IP will then explore all available avenues in an attempt to rescue the individual or business. A licensed insolvency practitioner will do their best to save you from financial ruin and work out the steps to get you back to a level of stability.

Be wary of unlicensed practitioners

Unregulated advisers are common for people trying to get cheaper services. However, clients of unlicensed practitioners are likely to enter the wrong insolvency procedure. Not only can this be frustrating for their creditors but it can be financially crippling for their clients. 

Only qualified individuals can be trusted to help. 

How to become a licensed insolvency practitioner?

To become an authorised insolvency practitioner, the individual must pass the Joint Insolvency Examination Board (JIEB) exams. There are two exams to take, one for personal insolvency and another for corporate insolvency. 

JIEB exams are known for being incredibly difficult and cost £1,000 per exam. They are also only held once a year, typically in November. You can take the exams separately or together, meaning you can do the personal insolvency exam one year and the corporate exam the next.

To take the exam, you must be a member of a registered professional body (RPB) such as:

  • The Association of Chartered Certified Accountants (ACCA)
  • Insolvency Practitioners Association (IPA)
  • The Institute of Chartered Accountants In England and Wales (ICAEW)
  • The Institute of Chartered Accountants in Scotland (ICAS)
  • The Institute of Chartered Accountants in Ireland (ICAI)
  • The Solicitors Regulation Authority (SRA) for the Law Society of England and Wales
  • The Law Society of Scotland
  • The Law Society of Northern Ireland

When you are registered with a professional body, you can get ready to take your exam. If you want to check when the deadlines are for applications, then you can visit the JIEB website.

Insolvency practitioners, RPBs and The Insolvency Service

Under the provisions of The Insolvency Act 1986, the Secretary of State recognises the previously mentioned independent professional bodies, to authorise their members to act as insolvency practitioners.

The Insolvency Service regulates the RPBs to ensure that the members they authorise will be competent insolvency practitioners. But because RPBs are independent bodies, they have their own rules for becoming a member. The rules are then enforced, so potential candidates have the required experience and training to become insolvency practitioners.

To learn more about this field, check out our comprehensive article on The Insolvency Service.

Qualifications 

A degree is unnecessary to become an insolvency practitioner. A relevant degree may make the process easier, but without passing the JIEB exams you cannot become a licensed IP. 

Degrees such as Law, Accountancy and Finance can be helpful as IPs are expected to have exceptional knowledge of the law and insolvency practises.

Starter courses

Starter courses are highly recommended if you don’t wish to pursue a university degree. It will give you valuable knowledge of the field. It will also help you decide if the career path is for you.

These starter insolvency courses are provided by the NTI. Prices start from £1,499 (ex VAT), this may appear expensive but they are significantly cheaper than completing a university degree.

The Certificate of Proficiency in Insolvency (CPI)

If you are just interested in a career in insolvency, you can get a CPI instead. The IPA conduct one exam every year around June. It is easier than the JIEB exam and allows you to get experience in this industry. It also costs £425 to take the exam compared to £1,000 for the JIEB.

What powers do licensed insolvency practitioners have?

Licensed insolvency practitioners have powers that let them be part of the process of personal bankruptcy and corporate liquidation. They are allowed to establish financial stability for an individual or business and they might be expected to:

  • Sell assets of the individual or company
  • Collect money that is owed to them
  • Work out claims that they can agree with the creditors
  • Allocate where the collected money goes

These powers relate to the roles that they could be required to have.

1. Provisional Liquidator

A provisional liquidator will look to preserve the assets of a business that is in trouble of facing insolvency. They aim to make sure all available assets are available when the insolvency process is initiated. Therefore they act as an individual that safeguards assets for the creditors.

2. Liquidator

As a liquidator, they will undertake the realisation of company assets during Company Liquidation. This entails distributing all funds equally between the listed creditors. In a compulsory liquidation or creditors’ voluntary liquidation (CVL), the Liquidator will have full control of all aspects of the company. All employees at the company will have their contracts terminated and the company’s directors will lose their power over the company’s assets. They will then manage the company affairs and investigate the conduct of all directors.

3. Administrator

With an administrator they will be brought on board during company administration to help with:

  • Rescuing the company.
  • Achieving a beneficial outcome for the creditors if the company cannot be saved and needs to be liquidated.

4. Administrative Receiver

Administrative receivers have the role of converting the company assets to cash on behalf of a secured creditor (for example a bank). Therefore the debtor will be able to make a repayment to the secured creditor.

5. Supervisor of a CVA

These duties are aimed at ensuring the terms of their Company Voluntary Arrangement (CVA) are complied with. They make sure the monthly payments are distributed fairly between creditors under the worked agreement.

How much money do they make?

Licensed insolvency practitioners make between £60,000 to £90,000 annually. The median salary according to UK Talent is £67,500.

When do you need an insolvency practitioner?

This is a hard question to answer as each situation is different. That’s why we recommend you get in contact with us at 0800 689 3861 or visit our services page. At Asset Solutions, we liaise frequently with IPs and work with specialist insolvency solicitors so you can always get the help you need to annul your bankruptcy or need help with your personal insolvency.