Frequently asked questions
Is there a guarantee that if the business enters into an insolvency procedure I can buy it back?
How do I find a reputable Insolvency Practitioner?
Why is the practitioner treating me like a director even though I am not listed at Companies House?
Is it normal to be asked to provide a guarantee or pay up front to an Insolvency Practitioner for their fees?
Most Insolvency Practitioners will provide an initial free meeting where the options are discussed.
After this point, if it is an Insolvency appointment then the Practitioner may have to rely upon the business or the directors for their fees. Due to recent case law an insolvency practitioner cannot recover certain fees from the assets of the insolvency appointment. As a result directors may be asked to pay these fees and costs.
Is there a guarantee that if the business enters into an insolvency procedure I can buy it back?
Whilst certain procedures do allow or facilitate 'pre-pack' arrangements there is never any guarantee. After appointment an Insolvency Practitioner should normally consider if there are any other options that would provide a better return to creditors. Normally where a 'pre-pack' is appropriate, the purchaser can expect the pre-pack to happen, management should be wary of people who guarantee that a pre-pack will happen.
How do I find a reputable Insolvency Practitioner
By nature of the work Insolvency Practitioners are involved in, the experience of others can often not do the practitioner concerned justice.
In order to find someone that you want to work with briefly discuss the problem (ideally anonymously) with a few practitioners (this is usually free). Choose an IP who has experience in your industry and understands the problems that will be faced. Also consider the size of accountancy firm and whether it is appropriate for the size of your business.
Be wary of advisors that make promises about what will happen in terms of trading the business or selling it through a pre-pack.
Why is the practitioner treating me like a director even though I am not listed at Companies House?
There are 3 types of directors and all have very similar responsibilities for the business' affairs and may be held responsible for its problems.
De-jure directors - those listed at Companies House;
De-facto directors - those people that are not listed at Companies House but hold themselves out to be directors. E.g. someone calling themselves a marketing director.
Shadow directors - those people upon whose instruction the board of de-jure directors act. I.e. if the board do what they are told by a certain person or act in accordance with his or her instructions then it may be viewed that this person is a director.
