Appointing a licensed Insolvency Practitioner is a formal step. This guide explains who holds the power to appoint one and what changes for directors once an Insolvency Practitioner is formally in place, from operating the business to communicating with creditors.
Who appoints a licensed Insolvency Practitioner?
Who appoints a licensed Insolvency Practitioner depends on the insolvency or restructuring procedure used, and whether the action is voluntary or compulsory. Once a licensed Insolvency Practitioner is formally appointed, a director's day-to-day control of the company changes, though exactly how depends on the route taken.
- Company Voluntary Arrangement (CVA): An Insolvency Practitioner acts as nominee before the CVA is approved and supports the director(s) throughout this stage to ensure the proposal is realistic and likely to be approved by creditors. An Insolvency Practitioner acts as supervisor once creditors approve the CVA proposal. Directors remain in control of the company throughout the CVA process, the Insolvency Practitioner solely has input on the CVA.
- Administration: This can be initiated by the directors, by a lender holding a qualifying floating charge over the company's assets, or by the court. This directly determines who appoints a licensed Insolvency Practitioner in administration. Most administrations are initiated out of court by the directors or the lender, without a court hearing.
- Creditors' Voluntary Liquidation (CVL): Shareholders pass a resolution to wind up the company, and the directors appoint a licensed Insolvency Practitioner to act as liquidator. This is a voluntary liquidation process entered into by company directors, rather than a compulsory process imposed by the court. Creditors have the right to override the decision and nominate a different licensed Insolvency Practitioner.
- Compulsory liquidation: This follows a winding up petition issued by a creditor and a court order. The Official Receiver is appointed, they are an officer of the court and appointed by the Insolvency Service. Following the initial stage, a licensed Insolvency Practitioner may be appointed liquidator.
- Members' Voluntary Liquidation (MVL): Shareholders appoint the liquidator, a licensed Insolvency Practitioner. This route only applies where the company is solvent and can pay all its creditors in full.
What happens immediately after appointing an Insolvency Practitioner?
Once appointed, a licensed Insolvency Practitioner must complete a set of formal steps, which include:
- Written notice to be sent to all known creditors to confirm the appointment of a licensed Insolvency Practitioner and the procedure entered into
- A filing with Companies House to record the appointment
- The company's invoices and website to be updated to show its formal status, for example ‘in administration’, this is required by law (Insolvency Act 1986)
- A request for the company's financial records and a statement of affairs, which sets out its assets, liabilities, and creditors
How does creditor communication change once an Insolvency Practitioner is appointed?
Once a licensed Insolvency Practitioner is appointed, they usually become the main point of contact for creditors, rather than the director.
- Creditors are directed to raise queries with the Insolvency Practitioner, rather than the director, which removes a significant burden from directors and centralises all creditor communications. The Insolvency Practitioner’s contact details are usually added to emails and the company website.
- Creditors are regularly updated, including with timelines and an indication of returns expected (where applicable).
- Creditor pressure that started before the Insolvency Practitioner was appointed, such as calls, letters, or threats of legal action, should now be addressed to the Insolvency Practitioner.
While creditors may attempt to approach directors for background information or context, particularly where disputes are ongoing, the Insolvency Practitioner is responsible for communicating with creditors.
Do directors still run the company after an Insolvency Practitioner is appointed?
This is one of the most common questions directors ask our Insolvency Practitioners, and the answer is different depending on the procedure.
| Procedure | Party in control after appointment |
| Company Voluntary Arrangement (CVA) | Directors continue running the company and working within the terms of the approved arrangement |
| Administration | The administrator takes control of the company and its affairs. Directors' powers are suspended for the duration of the administration |
| Creditors' Voluntary Liquidation (CVL) | The liquidator takes control of the company's assets, though directors work closely with the Insolvency Practitioner throughout |
| Members' Voluntary Liquidation (MVL) | The liquidator manages an orderly, solvent exit, with the directors’ role in managing the company coming to an end |
What are a director’s ongoing duties once an Insolvency Practitioner is appointed?
Once a licensed Insolvency Practitioner is appointed, there are responsibilities a company director must fulfil. Directors are legally required to:
- Cooperate fully with the Insolvency Practitioner, who acts as office holder, i.e. the Insolvency Practitioner responsible for the liquidation or administration
- Provide company information, paperwork, and a statement of affairs when requested
- Attend meetings with the Insolvency Practitioner, if requested
- Answer questions about the company's trading and financial history, this is usually via a questionnaire
The Insolvency Practitioner is also required to investigate director conduct in the period leading up to insolvency. This is a standard part of the process, though directors who fail to cooperate can face serious consequences, such as court orders or fines.
After we are formally appointed, which is usually after the letter of engagement is signed, we work closely with company directors, senior management, and often board members, to formulate a plan that immediately protects the business and its creditors. Depending on the procedure, we take control of all creditor communications, with a primary aim to either rescue, restructure, or close the business efficiently.
Dave Broadbent, Licensed Insolvency PractitionerGet the right Insolvency Practitioner appointed for your situation
Whether you're facing immediate creditor pressure or planning ahead, a licensed Insolvency Practitioner can explain what to expect after they are appointed, including what changes for directors, creditors, and employees.
As a leading directory with nationwide coverage, we can connect you with a licensed Insolvency Practitioner across most UK locations. We offer a free no-obligation initial consultation to help you understand your position and the options available to you. To understand the role of a licensed Insolvency Practitioner, read our guide on what an Insolvency Practitioner does on a day-to-day basis.
