Insolvency and Recovery procedures
Should it be necessary to place the company into an insolvency procedure then it will be necessary to involve an Insolvency Practitioner. This is a person, often an accountant, who has relevant experience in this area. The Insolvency and recovery industry is highly regulated and an Insolvency Practitioner (or 'IP') must have a licence granted by a professional body.
An Insolvency Practitioner will be able to advise on the appropriate recovery or insolvency procedure for the entity concerned. In general terms there are the following options open to the directors of a business:
Proposing a Company Voluntary Arrangement to the company's creditors;
Placing the company into Administration;
Invite the business's funders to appoint an administrative receiver;
Ask the business's funders to appoint a receiver over a particular asset or class of asset. Known as a fixed charge or LPA (Law of Property Act) receiver;
Placing the company into Creditors voluntary liquidation; or
Apply to court for the company to be placed into Compulsory liquidation;
It is often necessary to discuss the position and choice of insolvency procedure with the company's funders. If the funders hold a 'Qualifying Floating Charge' usually called a debenture or floating charge they must be contacted prior to implementing a particular procedure. Such parties may also take action and appoint an Insolvency Practitioner of their choice.
It should also be noted that not all of the above options will be available to all companies - it depends upon the financial structure of the business.
