Many directors facing insolvency ask the question, ‘do I need a licensed insolvency practitioner?’
This article will explain that question in detail, as well as the particularities of this important role.
What is a Licensed Insolvency Practitioner?
An insolvency practitioner is defined as someone with the necessary qualifications and license to assist individuals and company’s facing insolvency.
In actual fact, an insolvency practitioners’ duties are complex and varied than this. They may help businesses with company rescue procedures, such as voluntary arrangements and administration. They may also help solvent companies liquidate assets prior to a members voluntary liquidation.
The legal test for a licence is authorisation by a Recognised Professional Body. Each body sets its own entry requirements. The Insolvency Practitioners Association, for example, requires candidates to pass the Joint Insolvency Examination, set by the Joint Insolvency Examination Board (JIEB), and recommends at least three years’ practical insolvency experience before sitting it. Many practitioners come from an accountancy or legal background, but the licence is a separate qualification.
How Long Does it Take to Become an Insolvency Practitioner?
The law does not fix a training period for becoming an insolvency practitioner. Each Recognised Professional Body sets its own experience and examination requirements.
Many candidates are already chartered accountants, likely with some related insolvency experience under their belts, so the time to full qualification depends on the route and on the experience a candidate already has.
What does an IP’s job involve?
Insolvency practitioners are generally called in to help company directors either rescue or close down their companies. Being insolvent does not by itself oblige a company to appoint an insolvency practitioner. What requires one is entering a formal procedure: administration, voluntary arrangements and voluntary liquidations must be run by an authorised insolvency practitioner. In a compulsory liquidation, and in a bankruptcy, the Official Receiver usually takes office first, and a licensed practitioner may replace them later. Where an office-holder is appointed, their tasks will include:
- Selling any corporate assets
- Liaising with creditors
- Distributing monies realised fairly
- Investigating the actions of directors
- Sending the final account to Companies House at the end of a liquidation, after which the company is normally dissolved three months later
In the case of solvent liquidations, the IP has the same task of selling assets prior to winding the company up.
The third part of IP’s work involves company rescue mechanisms such as company voluntary arrangement and administration. An administrator acts in the interests of the creditors as a whole. The first aim is to rescue the company as a going concern, unless the administrator thinks that is not reasonably practicable, or that the second aim would give creditors as a whole a better result. The second aim is a better result for creditors as a whole than if the company were wound up without first being in administration. A CVA supervisor carries out the proposal the creditors approved, which often pays only part of the debts. Neither route guarantees that the company survives or that debts are paid in full.
Recognised Professional Bodies
In Great Britain, insolvency practitioners are authorised by a Recognised Professional Body (RPB). As at 18 August 2026 there are three:
- Insolvency Practitioners Association (IPA)
- Institute of Chartered Accountants in England and Wales (ICAEW)
- Institute of Chartered Accountants of Scotland (ICAS)
Insolvency is a regulated profession, and an insolvency practitioner acting in Great Britain must be authorised by one of these bodies. An authorisation granted in Northern Ireland also counts under section 390A of the Insolvency Act 1986. The Association of Chartered Certified Accountants, the Law Society of Scotland and the Solicitors Regulation Authority previously authorised insolvency practitioners but are no longer Recognised Professional Bodies. You can check whether a named practitioner is authorised on the Insolvency Service register.
What Procedures Require a Licensed Insolvency Practitioner?
Administration
Administration is a procedure in which an administrator tries first to rescue the company as a going concern, unless the administrator thinks that is not reasonably practicable or that a better result for creditors as a whole than a winding up is likely. Failing both, the administrator may realise property to make a distribution to secured or preferential creditors. Rescue and a return to profitability are not guaranteed. Read our full article on going into administration.
Bankruptcy
Bankruptcy refers to individual insolvency. An undischarged bankrupt cannot act as a company director without the court’s permission. Bankruptcy usually ends after 12 months, but a bankruptcy restrictions order or undertaking extends the ban. Read our full article on what is bankruptcy.
Liquidation
Liquidation is the processing of selling company assets prior to closing it down. In cases of insolvency, this liquidation may be a compulsory process following a ‘winding up petition’. Read our full article on compulsory liquidation.
Receivership
Where a lender holds a floating charge over a company’s assets, that charge can give it significant rights on default. Administrative receivership is, however, largely a historical procedure. For most floating charges created on or after 15 September 2003, the Enterprise Act 2002 removed the holder’s ability to appoint an administrative receiver, and the usual route is now for a qualifying floating charge holder to appoint an administrator instead. Administrative receivership survives only for older charges and for a narrow set of statutory exceptions, mainly in capital markets and certain project financings. Fixed charge (LPA) receivers over specific property are a different thing again and remain common.
Read our full article here on receivership.
Company Voluntary Arrangements
A CVA (Company Voluntary Arrangement) is a formal, binding agreement between a company and its creditors to pay all or part of its debts over time. The company’s directors propose it (or the administrator or liquidator, if the company is already in administration or liquidation). A qualified insolvency practitioner must act as nominee and then supervise the arrangement. Approval is not a simple majority: the proposal needs the agreement of three-quarters or more in value of the creditors who respond, and it is not approved if more than half of the total value of the unconnected creditors, meaning all those whose claims are admitted for voting, whether or not they voted, vote against it. Shareholders vote separately. If the two decisions differ, the creditors’ decision takes effect, but a shareholder can apply to the court within 28 days to challenge it.
Read our full article on CVA’s.
Members’ voluntary liquidations
A members’ voluntary liquidation or MVL is a formal way to close a solvent limited company. It is often used when a director is retiring, for example, and wishes to close the company down in a tax-efficient manner. The directors (or a majority of them, if there are more than two) must make a statutory declaration that the company can pay all its debts in full, with interest, within a stated period of no more than 12 months. Voluntary strike-off is another route for some solvent companies.
Read our full article on members voluntary liquidations.