Despite sounding similar, insolvency practitioners and insolvency solicitors perform distinctive roles for insolvent companies and directors. Which one you should get advice from depends on the circumstances affecting you or your company. If you’re looking for advice on rescuing or closing your company, or if you’re struggling with personal or sole trader debts, speak to a licensed insolvency practitioner. If your query relates to legal issues or you need legal representation for other insolvency-related matters, speak to an insolvency solicitor.

What is the difference between an insolvency practitioner and an insolvency solicitor?

An insolvency practitioner’s main job is to work with insolvent companies and individuals, aiming to reach the best solution for the creditors and the insolvent party. Said best solution may involve putting the company into a repayment arrangement or closing the company to draw a line under the debts.

By contrast, insolvency solicitors specialise in advising directors and creditors on matters around disputes and other legal issues relating to insolvency and the affected parties.

An insolvency practitioner’s role

Depending on the process the insolvent company or individual enters, the insolvency practitioner’s role could vary from administrator, and liquidator, to administrative receiver, and supervisor in a voluntary arrangement.

As part of these roles, the insolvency practitioner will have a number of duties, including:

• Advise the insolvent company or individual on the best course of action.
• Negotiate with creditors and other involved parties.
• Provide the creditors with regular reports.
• Investigate the director(’s) actions leading up to and during the insolvent period and report back to the Insolvency Service when necessary.

You should speak to an insolvency practitioner as soon as you’re aware that either you or your business is insolvent.

An insolvency solicitor’s role

An insolvency solicitor’s role is to resolve issues that have arisen from the insolvency or issues which may have led to it.

This role could include:

• Advising creditors of insolvent companies and individuals.
• Advising directors facing threats of disqualification.
• Acting on an insolvency practitioner’s behalf to manage claims against insolvent companies or individuals.
• Advising directors regarding the re-use of an insolvent company’s name.

You should seek advice immediately

Regardless of which speciality you need, if you know or suspect you are insolvent, you should seek professional advice immediately.

Burying your head in the sand and hoping the problem will resolve itself or just go away will only worsen the situation. Take decisive action now and get the help you or your company needs while there’s still time.

How we can help

It’s not always obvious which professional you’d be best taking advice from. Depending on your situation, you may need advice from multiple professionals specialising in different areas of insolvency. Speak to us for free, impartial, and non-obligatory insolvency advice. If you require additional advice from an insolvency solicitor, we can point you in the right direction.

• Repaying the debt in instalments
  Depending on the company’s circumstances, it may be able to repay its debts in affordable monthly instalments while continuing to trade. A Company Voluntary Arrangement (CVA) allows a company to repay a monthly amount towards its unsecured debts at a tailored, affordable rate. The arrangement usually lasts five years, and once concluded, the remaining unsecured debts are written off.
  Repaying a company’s debts through a Company Voluntary Arrangement (CVA)
  A similar arrangement exists for individuals and the self-employed. Individual Voluntary Arrangements (IVAs) allow insolvent sole traders and individuals to repay their debts in affordable instalments.
  Repaying sole trader and personal debt through an Individual Voluntary Arrangement (IVA)
• Restructuring the company
  If a company would benefit more from restructuring than just repayment, directors can opt to put the company into administration. Doing so puts a halt to creditor pressure and allows the insolvency practitioner to restructure the company with the aim of making it profitable again. The company is protected from creditor pressure while the IP attempts to rescue the company as a going concern.
  Restructuring a company via administration
• Voluntarily closing the company
  Despite your best efforts, the company’s debts can be of such a level that continuing to trade isn’t a viable option. In which case, you can put the company into a Creditors Voluntary Liquidation (CVL). Doing so will close the company, writing off its debts and allowing the directors to move on. In most cases, entering liquidation voluntarily is better than waiting for creditors to force the company into compulsory liquidation via a winding-up petition.
  Closing a company via a Creditors Voluntary Liquidation (CVL)

In summary

Although they may sound similar, insolvency practitioners and insolvency solicitors have distinct roles and responsibilities. Which one you’d be best speaking to depends on the insolvency’s circumstances. An insolvency practitioner will advise the insolvent company or individual on the best course of action to alleviate the debts and in the case of an insolvent company, save it where possible. An insolvency practitioner will also act as a medium of communication with the creditors. By contrast, an insolvency solicitor’s job is to manage legal issues that may arise around the insolvency, advising directors and employees affected by that legal action, and occasionally acting on an insolvency practitioner’s behalf.

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