What does an insolvency practitioner actually do?

Full answer

An insolvency practitioner (IP) is an individual licensed by a recognised professional body (such as the ICAEW or IPA) to take formal appointments when a person or company cannot pay its debts. By law, only an authorised IP can act as a liquidator, administrator, administrative receiver, trustee in bankruptcy, or supervisor of an Individual Voluntary Arrangement (IVA) or Company Voluntary Arrangement (CVA). Who it affects: company directors facing insolvency, sole traders and individuals seeking an IVA as an alternative to bankruptcy, and creditors trying to recover money owed. The IP owes duties to creditors as a whole, not to the director who appointed them. What they do depends on the procedure. In a liquidation, the IP realises (sells) company assets, investigates the directors' conduct, and distributes proceeds to creditors in the statutory order of priority. In an administration, the aim is to rescue the company as a going concern or achieve a better result for creditors than immediate liquidation. In an IVA or CVA, the IP proposes a repayment plan to creditors and, if approved, supervises the monthly payments. IPs are paid from the assets of the insolvent estate, typically by time costs or a fixed/percentage fee, which must be approved by creditors or a creditors' committee. A 2026/27 point worth noting: HMRC remains a secondary preferential creditor for certain taxes it collects on behalf of others - PAYE, employee NI, and VAT - meaning these are paid ahead of floating-charge holders and unsecured creditors. This affects how much is left for other parties. This is a procedural and legal area, so no fixed fee figures apply. If you are weighing insolvency against repaying tax debts, model your underlying tax position first and seek licensed advice before acting.

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