An insolvency practitioner is a licensed professional who takes legal control of a company’s affairs when it’s insolvent or closing, to make sure creditors are treated fairly while guiding you through the right process.
An insolvency practitioner is authorised and regulated to act for insolvent companies and individuals. Many come from an accountancy background and must pass specialist insolvency exams, gain experience and be approved by a recognised professional body before they can take formal appointments.
Only a licensed insolvency practitioner can act in formal procedures such as Creditors’ Voluntary Liquidation, Administration and Company Voluntary Arrangements.
When do you need an insolvency practitioner?
You need a licensed insolvency practitioner if you’re considering any formal insolvency or close-down route, including:
- Creditors’ Voluntary Liquidation (CVL) to close an insolvent company and deal with debts.
- Administration to protect the company from creditor action while a rescue or sale is arranged.
- Company Voluntary Arrangement (CVA) to agree affordable repayments while trading continues.
- Members’ Voluntary Liquidation (MVL) to close a solvent company and distribute reserves tax-efficiently.
All of these procedures require an insolvency practitioner to be appointed by law.
What does an insolvency practitioner do in each process?
Creditors’ Voluntary Liquidation (CVL)
An insolvency practitioner’s core duties in Creditors’ Voluntary Liquidation are to realise assets for the benefit of creditors and close the company in line with the Insolvency Act and Insolvency Rules.
The insolvency practitioner is appointed as Liquidator and takes control of the company from the directors. They gather and sell the assets, agree creditor claims and distribute funds in the statutory order.
They also investigate the reasons for failure and submit a confidential Director Conduct Report to the Insolvency Service. From appointment, all creditor contact is routed through the insolvency practitioner, which removes the day-to-day pressure on you.
Administration
Administration exists to secure the best lawful outcome for creditors overall, not simply to keep the company alive at any cost.
In Administration, the insolvency practitioner becomes Administrator and assumes management control of the company, with the objective of rescuing it as a going concern or, if that is not achievable, achieving a better result for creditors than in a liquidation.
Entering Administration triggers a statutory moratorium that pauses most creditor action while options are assessed. Depending on viability, the administrator may continue trading, restructure operations or sell the business and assets as a going concern to preserve value and jobs.
Company Voluntary Arrangement (CVA)
For a CVA, the insolvency practitioner first acts as Nominee, reviewing your proposal to creditors, testing feasibility and reporting to the court.
If creditors approve the proposal, the insolvency practitioner becomes Supervisor and then monitors compliance with the terms, adjudicates creditor claims and pays agreed dividends over the life of the arrangement.
The supervisor’s role is to make sure the company sticks to what has been agreed and that payments are shared fairly among creditors.
Members’ Voluntary Liquidation (MVL)
In a Members’ Voluntary Liquidation, the insolvency practitioner acts as Liquidator. They ensure the Statutory Declaration of Solvency and supporting accounts are in order, settle all liabilities in full and then distribute the remaining cash or assets to the shareholders.
They also deal with the required filings at Companies House and HMRC so the company can be brought to an orderly close. Although the company is solvent and cash rich, a Members’ Voluntary Liquidation is still a formal process that must be run by a licensed insolvency practitioner.
Compulsory Liquidation
Compulsory Liquidation is a court-ordered winding up of a company, usually initiated as a last resort by a creditor who’s not been paid.
The court will appoint an Official Receiver to handle the liquidation, take control of the company, make sure trading has stopped, and realise any assets to repay creditors.
They also ensure filings with the court and Companies House are made and report on director conduct to the Insolvency Service so the case can be brought to an orderly close.
In some large or complex cases, a private insolvency practitioner is likely to be involved in the process too.
How an insolvency practitioner helps you as a director
Stops the firefighting: Creditor calls and legal threats are redirected to the insolvency practitioner.
Protects you from worsening the position: They guide you away from wrongful trading and other risks.
Gives structure and certainty: You swap daily crisis management for a legal process with clear milestones.
Maximises outcomes: Whether saving jobs through a sale in Administration or closing cleanly via a Creditors’ Voluntary Liquidation, an insolvency practitioner is focused on getting the best lawful result for creditors overall.
How are insolvency practitioners regulated?
Insolvency practitioners are authorised by recognised professional bodies and must follow statutory requirements, best practice and ethical codes. Acting without a licence is a criminal offence. Complaints and conduct are monitored, and there can be serious professional consequences where standards are not met.
You can check an insolvency practitioner’s status using official registers and directories, including the government’s “find an insolvency practitioner” service.
Who pays the fees?
Insolvency practitioner fees are either approved by creditors, the court or set by statute, and are paid from available assets before funds are distributed to unsecured creditors.
In a Company Voluntary Arrangement, fees are built into the agreed monthly contributions. In a Members’ Voluntary Liquidation, fees are usually paid from cash reserves prior to distributions to shareholders.
Up-front clarity on how fees are set and disclosed is standard and you should expect a written explanation before proceeding with any insolvency firm.
How to choose the right insolvency practitioner
Check their licence and professional body using the official finder service
Look for relevant case experience in your sector or with specific issues like HMRC arrears or landlord disputes
Ask for clear fee explanations and how approvals work in your chosen process
Expect straight answers about your risks, including any director conduct questions
Gauge communication style: you should feel informed, not baffled by jargon
Speak to an insolvency practitioner today
If you’re worrying about paying wages, HMRC pressure or supplier arrears, a short call with a licensed insolvency practitioner will give you clarity fast. We’ll talk through your options and agree the safest next step for you and your creditors.
Early engagement usually gives you more options and a better outcome for creditors. Call us for free, confidential, no-obligation advice.
