An Insolvency Practitioner is one of the most important in the whole IVA process. It is thanks to their skill and judgment that hundreds of thousands of people have been able to deal with their debts properly since IVAs were first introduced. But what exactly is their role and why are they so important?
What is an Insolvency Practitioner?
An Insolvency Practitioner is a qualified accountant that has specialised in insolvency law. They are highly qualified professionals with a deep understanding of the financial laws relating to insolvency, and have undertaken key exams to gain a licence to practice their services. Sometimes you find an IP who is a trained solicitor and has undertaken the accountancy side of things at a later date, but usually it is the other way round.
What do they do?
Complete the complex paperwork and court proceedings
IVAs can only be set up and run by a licensed IP, so anyone wanting to get an IVA must go through them. It’s a complex process full of legal pitfalls and because IVAs are deeply entwined with Insolvency laws and are governed by them only qualified and appropriately licensed people can do the work involved.
Nominate you for an IVA
After establishing that you qualify for an IVA, your IP will start the proceedings to put you forward or ‘nominate’ you for an IVA. This involves the pulling together all of your financial paperwork and other documents, which may involved speaking to your creditors to obtain the information required, and drafting a proposal/draft agreement for your creditors to consider. Once this is done, your IP contacts your creditors, circulates the proposal/agreement and then arranges a meeting with them all to discuss the proposal. This creditors meeting is the most important part of the IVA process.
Run the creditors meeting as Chairperson
Once all the creditors are assembled on the day, your IP will explain what is happening, the points of the proposal that are the most important and ensure that each creditor has voted according to correct procedures needed to either accept or reject your IVA proposal. The creditors may agree, disagree or adjourn to consider the agreement further. Your IP has the power to adjourn the meeting and set another meeting if they feel the creditors are not advancing towards a decision quickly enough.
Represent your interests to your creditors
There’s no doubt that an IP has to be a skilled negotiator if they are to persuade a number of your creditors to accept an offer to pay off a substantially reduced debt over five years. However, this is where an IP are worth their weight in gold – being able to put the case in the terms that creditors understand and respect enough to agree to.
Supervise the IVA
If the IVA gets the green light, the IP then moves into another role – that of supervising your IVA as it progresses. Here their focus is making sure the needs of the creditors are met and you adhere to the conditions of the agreement that you made with them. The IP will:
- Ensure your payments are collected from you on time and that your creditors receive their payments on time.
- Undertake annual reviews of your finances take place and any adjustments needed to keep it on course are made – your annual salary may increase or decrease or there may be bonuses or profit-share dividends.
- Undertake an assessment of your assets and arrange the valuation and sale of them if needed.
- Protect you from your creditors and ensure that you do not need to speak to them again.
- Ensure all the proper paperwork with your creditors and the Insolvency Service is in order at the end of the IVA term, and dispense a discharge certificate
No other professional needs to have so much accountancy and legal knowledge to be licensed to practice as an IP. They are integral to the success of your IVA, and a good IP is your ticket to keeping your creditors happy, clearing your debt and turning your life around in the future.