Worldwide, insolvency work is carried out by different types of professionals. In the US for example, it is usually lawyers that deal with bankruptcy and insolvency cases. In fact, in many countries of the world, it is lawyers that take care of bankrupt and insolvent people and companies.
Maybe uniquely in some ways, insolvency as a process is a mix of legal and financial disciplines. Usually closely controlled by the due process of law, it is the financial aspects of the person or the company that needs the skilled attention of the professional. hence, in some ways, lawyer dealing with an insolvency case is something of a quasi-accountant and an accountant dealing with an insolvency has to act as a quasi-lawyer.
In America, the terms bankruptcy and insolvency generally mean the same thing and apply to companies and people. In the United Kingdom the term bankruptcy is only used in relation to insolvent people, not companies. For companies in the UK the word insolvency is more commonly used and there are various types of insolvency that apply to companies. Funnily enough, Scotland has very different procedures to England and Wales but here we are mainly talking about how insolvency operates in England and Wales.
We were speaking with Insolvency Practitioners Liverpool about the procedures and they explained that people dealing with insolvency cases must be licensed before they can deal with a formal insolvency situation and hence they are known as licensed insolvency practitioners. Generally they tend to be accountants in England and Wales but there are some solicitors who specialise in insolvency as well and sit the exams to qualify as licensed insolvency practitioners too. The Liverpool insolvency experts we spoke with are specialists who have only ever worked within the world of insolvency but consider themselves to be more accountants than solicitors.
Often times an insolvent Liverpool business will be recommended to a local insolvency specialist for advice and to see what the right way out of their predicament might be. If the business can’t pay its bills and trade is generally poor, and with few assets, we gather that liquidation might be necessary. For small companies a creditors voluntary liquidation is a popular way to bring the life of an insolvent company to an end. For some businesses though, there might be other avenues to explore like an easier repayment schedule where the company can carry on trading and pay old bills from future trading profits. This process is called a Company Voluntary Arrangement. It seems like a useful way to resolve debt issues and yet keep the company afloat. If you are reading this in the the UK we suggest you take a look at a UK specific insolvency website and find a licensed insolvency practitioner near to wherever you are. They will often speak with you on the phone or let you have a first meeting with no fee payable. That way you can find out more about what your options are without any obligation or financial commitment.