“Whena businesslooks attheexercise positivelyan improved pathcanbe embarkedon whichresults inbetter perfomance

Some of the more uncharitable comments about licensed insolvency practitioners (IPs) centre around killing businesses, jobs and the hopes and aspirations of those trying to earn a living.

While it is true that an IP features in the closure of many businesses and loss of employment, it is only one part of their daily tasks.

Given the fact that an IP can close a business, dismiss people, sell assets, raise legal action and deal with all stakeholder groups correctly, a licence to operate is not handed out indiscriminately.

In the UK, an IP can be expected to have spent several years at university and at least three years thereafter obtaining a chartered accountant designation.

Once qualified, the prospective IP is likely to work with a professional firm of accountants learning the many facets of insolvency practice for three or four years before the Joint Insolvency Exam Board (JIEB) examinations are tackled.

The JIEB process requires detailed study and is expensive to sit, while its exams are notoriously challenging.

Even then, passing the exams does not mean an individual can become a liquidator, administrator or trustee.

A licence is required from a governing body, of which there are several in the UK - for example, the Institute of Chartered Accountants of Scotland - which requires the applicant to demonstrate appropriate competence.

Ongoing training is also necessary in order to keep abreast of developments. There is also an annual review of the licence by the governing body, supported by regular quality control visits by its monitoring team.

In addition, there are various statutory fees to pay annually and the IP must obtain specific insurance cover for his actions.

Once all of the above matters are in place, the IP has to consider how to market his services in order that work is obtained.

Many years’ hard work and not inconsiderable expense is, therefore, required before the first appointment is accepted.

Given the effort required to obtain and maintain IP status, you can understand why an IP will safeguard good work practices most carefully.

IPs who have had their licence revoked - for example, through bankruptcy or being cast out by their governing body - rarely get a second chance.

In fairness, the law helps to protect the status because section 389 of the Insolvency Act 1986 provides that anyone seeking to act as an IP without appropriate accreditation may face either a fine or imprisonment.

A creditor such as a bank will often ask an IP to review a business and provide a report covering various issues due to concerns about financial viability.

If the visit of an IP is seen as unwelcome by the business being reviewed, negotiation, persuasion and understanding are key factors in a beneficial exercise.

Experience shows that when a business looks at the exercise positively and considers any recommendations, an improved path can be embarked on which results in better performance and improved creditor support.

The IP’s role in such cases is often to coordinate input from suitable industry experts in order to achieve the optimal outcome.

After all, an IP may be dealing with a shop, factory, fishing boat, farm, software designer and builder in the same week and, clearly, cannot hope to be anything other than a steadying influence and agent for effective change. A good network of contacts is a crucial part of the IP’s arsenal.

Providing personal insolvency advice is also a regular feature of the IP’s job and this involves setting out all of the options available once a full assessment of each person’s situation has been made.

Experience again shows that everyone has a unique set of circumstances and personal view about how the situation has arisen, who might be to blame and what is possible in terms of planning a practical way forward.

Advice is often sought on how best to organise a solvent liquidation to maximise the benefit of entrepreneur’s relief for tax purposes.

In such situations, shareholders tend to clamour for an early extraction of money so it can be used elsewhere.

A key task of the IP, therefore, is to make sure adequate provision is made for all known liabilities before any cash, or assets can be distributed.

Many IPs prefer to refer to themselves as turnaround experts and become involved saving companies in distress, sometimes in the public gaze but often working in the background to avoid any adverse publicity.

Much of this work, together with other nonformal advisory appointments is not publicised because of the need to preserve confidentiality.

In conclusion, while some may view the IP as having a “licence to kill”, those who have benefited from the service might contend that it is a licence to save a business, protect employment, generate new ideas and provide support at a time when it is most needed.

Asking for help is more a sign of strength than weakness because it shows that a person or company recognises there is a financial problem and is interested in the greater long-term good.