An Insolvency Practitioner (IP) is an individual who is licensed an authorised under the Insolvency Act 1986 to act as office holder in relation to formal insolvency procedures. Insolvency Practitioners generally have a financial background in accountancy, some are lawyers or insolvency specialists working in firms of accountants.

The Insolvency Act 1986 authorises IPs to act as office holders in the following formal procedures:

  1. In relation to an individual as:                              
  • Trustee in bankruptcy
  • Interim receiver of his/her property
  • Nominee or supervisor of a voluntary arrangement
  • Trustee under a deed or arrangement
  • Trustee under a trust deed
  • Administrator of a deceased insolvent estate
  1. In relation to a company or partnership as: 
  • Provisional liquidator
  • Liquidator
  • Administrator
  • Administrative receiver
  • Nominee or supervisor of a voluntary arrangement
  • Trustee of a partnership

Under UK law, an IP must hold a licence and have:

  • Passed the insolvency examinations (JIEB exams)
  • Gained experience in insolvency work
  • Satisfied an authorising organisation (also known as regulator) that they are fit and proper to act as an IP

Acting as an insolvency office holder without being authorised as an IP is a criminal offence. All practising insolvency practitioners in the United Kingdom must be authorised to act by either the Secretary of State or by one of the following Recognised Professional Bodies:

  • The Association of Chartered Certified Accountants (ACCA)
  • The Insolvency Practitioners Association (IPA)
  • The Institute of Chartered Accountants in England and Wales (ICAEW)
  • The Institute of Chartered Accountants in Ireland
  • The Institute of Chartered Accountants of Scotland

All IPs must:

  • Provide security
  • Not be bankrupt
  • Not be disqualified under the CDDA 1986

IPs are subject to significant regulation through legislation, their professional bodies, Statements of Insolvency Practice (SIPs) and the Insolvency Code of Ethics. Breaches of these rules can have serious consequences in the form of financial liability, disciplinary proceedings and even criminal proceedings.

The job of an IP involves sorting out difficult situations for individuals, sole trader businesses, partnerships, limited liability partnerships and limited companies. In some cases, their main task is to try to rescue a business. If it is not possible, the IP aims to:

  • Sell the assets of the person or company who owes money
  • Collect money due to the person or company
  • Agree creditors’ claims
  • Distribute the money collected after paying costs

The route by which an IP is appointed varies according to the insolvency procedure being followed. Appointments could be made via a meeting of creditors, by the courts if a winding-up order has been granted, or by the Secretary of State if the official receiver so requests.

Licensed insolvency practitioners will always seek to make positive recommendations in order to help the company to avoid insolvency and to prosper. Many businesses do survive given such assistance, provided it is sought early enough.