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What Makes a Good Insolvency Practitioner?

Licensed UK Insolvency Practitioners FREE Meeting for Company Directors

We can help with serious company debts, HMRC and creditor pressure, VAT/PAYE/Tax arrears, cashflow problems and raising finance.

What Makes a Good Insolvency Practitioner?

Reviewed: 1st September 2015

The advice and guidance of a licensed Insolvency Practitioner (IP) can make the difference between success and failure for companies in distress. Getting the professional help needed to regain momentum and improve a poor cash flow situation is invaluable, but what makes a good IP?

What do you need to look out for at a potentially critical time in the company’s life? Soft skills such as being able to communicate effectively and actively listen to directors to gain a better understanding of the problems being experienced, are an important supplement to the technical knowledge and expertise that will help the business to recover.

Patience to reach the crux of the problem

No two businesses are the same, however common the problems encountered. Taking time and having the patience to uncover underlying issues that may be hampering operations is vital if the correct solution is to be found.

Displaying empathy for the stresses experienced by directors trying to deal with creditors and negotiate a mutually agreeable conclusion, can also make the whole situation easier to bear.

Rescue or closure?

A good IP will keep business rescue at the forefront of discussions, rather than simply allowing the business to succumb to liquidation and closure. Identifying a range of potential options based on a thorough review of the company’s operations, could help to turn the business around and aid the company’s return to profitability.

Maybe a different source of funding is the key to recovery? IP’s will have connections with a range of finance providers offering alternatives to mainstream funding that you may not have thought about - leveraging the value of hard assets or sales ledger invoices, for example.

Excellent communication skills

Identifying the best practical course of action is just part of an IP’s role. A good Insolvency Practitioner also needs to have the ability to communicate in layman’s terms with directors and other company officials.

Clearly conveying the reasons why it would be appropriate to take their advised route is important, so that directors understand what will happen in practice and have no nasty surprises further down the line.

Experience across all industries

Understanding the nuances and complexities of different industries allows an effective IP to give sector-specific advice that makes a real difference. They will add a level of understanding that only previous experience can provide, as well as a professional angle on each situation that offers greater insight into what caused the problems initially.

The construction industry, for example, has long remittance times with delayed payment being a huge problem for many smaller contractors. Optimising a company’s cash flow and credit control procedures may be all that is needed to improve liquidity and help the business back to its feet.

A personable approach

A good Insolvency Practitioner will understand the ramifications for directors of any creditor action, and how it could impact on them as individuals. An IP needs to be approachable, therefore, and open to answering as many questions from directors as needed.

Willingness to spend time explaining each stage of a suggested process, to identify any potential ‘stumbling blocks’ for directors such as personal liability or accusations of wrongful trading, would be a welcome trait that makes the whole process a little easier.

Proactive and efficient

Being able to quickly spot a tangible strategy that might be suitable for the company, and identify where the ‘leaks’ are, provides the best chance of survival and helps to stop the money drain. This ability to take fast action helps to keep the business alive, and offers the best chance of survival.

Honesty and integrity

Due to the nature and sensitivity of their duties, it is vital for an Insolvency Practitioner to be open and honest in all their dealings. The importance of the task at hand requires complete transparency and integrity.

Dealing with two naturally-competing parties, and investigating directors’ duties/actions leading up to the insolvency, requires much tact and diplomacy without compromising on the determination to identify what went wrong.

Effective working relationships with good solicitors and valuers

Having contacts with solicitors and valuers who are equally reliable and trustworthy means that the service offered to both business and creditors is as seamless as possible. Speed can make or break a potential route out of insolvency – if a pre-pack administration has been decided upon, for example. Having effective support from other professions makes the process less stressful for those involved.

Excellent leadership and project management skills

Keeping everyone up-to-date, both directors and creditors, and meeting all the notification requirements laid down in law is not an easy task. A good IP will demonstrate clear understanding of the processes at hand, as well as excellent leadership and management skills in implementing them.

As the UK’s leading business recovery practice, With 55 offices stretching from Inverness down to Exeter, Real Business Rescue can offer unparalleled director advice across the UK.

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