There can be understandable confusion as to the differences between solicitors, accountants and Insolvency Practitioners and which to go to if you or your business are in financial distress. We hope this brief article may assist in clarifying.
Insolvency Practitioners are fully licensed and regulated professionals, just like solicitors and accountants. In fact, a large number of insolvency Practitioners are also qualified as accountants or solicitors since the skills overlap significantly. The regulatory body for Licensed Insolvency Practitioners is the Insolvency Practitioners Association.
The fundamental difference between an Insolvency Practitioner and a solicitor or accountant is that only an Insolvency Practitioner can be appointed to act in the following situations :-
- As a trustee in bankruptcy
- As liquidator of a company
- Individual Voluntary Arrangements
- Company Voluntary Arrangements
- As company administrator
- Administrative Receivership of a company
Where confusion can occur is that solicitors or accountants can advise and prepare paperwork or attend any necessary hearings or meetings relating to any of the above, whether for the individual or business in question or for a creditor, but in terms of the role of formal office holder with legal duties, that role is only open to an Insolvency Practitioner. The other potentially significant point to bear in mind is that Insolvency Practitioners commonly step in where a company rescue is attempted, in the role of administrator. This involves the need to have excellent general business and management skills and in-depth legal knowledge, especially of employment law.
It is not unusual for a solicitor or accountant to, on a client’s behalf, appoint an Insolvency Practitioner and many Insolvency Practitioners also instruct lawyers to deal with legal aspects for them, which again emphasizes that there is synergy between the professions.
In summary, if you are in the unfortunate position of needing to go bankrupt, either a solicitor or Insolvency Practitioner can help with the necessary paperwork. If your company is in difficulties and must be liquidated, you can seek advice from either a solicitor or Insolvency Practitioner but if you are considering the possibility your business can be saved, it’s a good idea to go and see an Insolvency Practitioner at an early stage. You may not need a lawyer.