What is an Insolvency Practitioner?

Summary: This article explains the role of an Insolvency practitioner (IP), what they are authorised to do, and how much they charge (in the case of an Individual Voluntary Arrangement or IVA).

An insolvency practitioner (IP) is someone who deals with anything related to insolvency. They work both on behalf of creditors seeking to reclaim outstanding debt by petitioning for bankruptcy, and also on behalf of individuals, often managing the terms of bankruptcy or IVA.

Who are Insolvency Practitioners?

IP’s are usually accountants, or specialists working in accountancy firms, and they must be authorised under the Insolvency Act 1986 in order to practice. They must also undertake continued professional development to ensure they are fully up to speed with matters relating to insolvency.

What is an IP authorised to do?

The Insolvency Practitioners Associations states that, in relation to individual insolvency, an IP is authorised to be:
• a trustee in bankruptcy
• an interim receiver of property
• a nominee or supervisor of a voluntary arrangement
• a trustee in a deed or arrangement
• permanent or interim trustee in a sequestration
• a trustee in a trust deed ( Scottish equivalent of an IVA)
• the administrator of a deceased insolvents estate

Does an Insolvency Practitioner charge for their services?

As a general rule, an IP will charge for their services. In the case of an IVA for example, the fee is usually built into the monthly repayments calculated. While there are a few ‘free’ organisations that offer help and advice for individuals, such as the Citizens Advice Bureau (CAB) or Stepchange, their turnaround times can be very lengthy due to the large number of cases they deal with, and in the case of an IVA for example, the case will eventually be passed on to a commercial Insolvency Practice, and fees will need to be paid.

How much will the fees for an IP be in an IVA?

With an IVA, there is usually a ‘nominee’ fee, which is the cost of the initial proposal and setting up of the IVA. This is often between £1000 and £1500. There are usually ongoing ‘supervisor’ costs as well, which could be anywhere between £300 and £800 per year. However, it is important to bear in mind that these fees are not usually (certainly in the case of a reputable IP) charged up front, and they are built into the cost of the IVA. The fee has to be agreed with the creditors as the fee is taken from the monthly payment before it is forwarded to the various creditors involved.