Perhaps the description above is not heard very often, but many tasks are undertaken by a licensed insolvency practitioner “IP” that, arguably at least, fall into such definition. At this time of year when we hear much about helping those less fortunate than ourselves and are exhorted to show our caring side e.g. by giving to charity, let’s have a look at some of an IP’s daily tasks that demonstrate that insolvency work is not all about closing a business and sacking people.

Indeed, an IP is often consulted by a business in financial trouble. After listening carefully to the background situation and asking appropriate questions, it may turn out that the business can be saved, albeit with some tweaking. The IP will work in conjunction with management and key stakeholder groups in order to save the business and related jobs. Understandably, this type of assignment is undertaken confidentially rather than in the open glare of a formal insolvency process. A successful task means that the IP is thanked ( and paid ! ) before departing the scene : leaving the business in a stronger more viable position.

In another example, the IP can be approached by an individual seeking advice about how to deal with a barrage of creditor pressure. Again, an exploratory first meeting is held ( no obligation : no charge ) in order to determine the facts. The various options for dealing with debt are explained, together with the advantages/disadvantages of each one. A significant benefit to many who attend such a meeting is the ability to share problems and listen to experienced advice in a private forum because many find it difficult to discuss personal financial problems with friends/family.  Being able to remove some of the anxiety and offer constructive solutions is invariably met with major relief by the client. The result may be an informal debt repayment programme or something more formal such as a trust deed or sequestration. Even where there are insufficient assets to merit Meston Reid & Co acting in a sequestration process, help remains on hand to assist the person complete the lengthy forms that allow the State to accept a  sequestration application

The reality is that whilst googling a problem can produce lots of responses, many articles on the internet tend to be based upon English bankruptcy law, and  those that might be pertinent never seem to fit a person’s individual circumstances. Small wonder that most websites have a few catchy highlights and then ask you to call for advice.

An IP may well be engaged by a bankrupt to help deal with the trustee in sequestration e.g. by completing forms, or advising about how to deal with the potential equity in the matrimonial home. Being able to speak to the trustee with IP knowledge is helpful to the bankrupt, who is often unaware of the details of the process and what can/can’t be done.

Similarly, a director can find that the Director Disqualification Unit is taking steps to either query their actings or perhaps disqualify them from being a company director in the future. It is not uncommon for there to be many facets to a situation and the experienced IP is able to offer ways to deal with matters e.g. provide more information to the Unit that might change their view, engage with the company’s former professional advisers in order to obtain details, act as an expert witness, engage a suitably qualified law agent, give general guidance to the director about the options e.g. consider an Undertaking if appropriate, and offer support as the process unfolds. For the vast majority of directors being pursued under the Company Directors Disqualification Act 1986, the whole experience is both new and unnerving : help is required to navigate the process.

Equally, a director may be pursued by the liquidator e.g. for recovery of an overdrawn loan account. The IP will often look at how the loan account has been calculated and provide help to the director when negotiating repayment terms to the liquidator. An obvious advantage of the IP’s help is that he/she will have handled both sides of such scenario in the past and hence, be able to offer constructive, experienced and pragmatic support to the director.

During 2021 there has been a noticeable increase in the number of solvent liquidations as the impact of IR35 has meant a lesser requirement for one-man companies in the oil and gas sector. Thus, it has been a pleasure to act as liquidator and see the smiling faces of shareholders as they pocket large payments under a benign capital gains tax regime that may generate a personal tax liability of only 10% of the sum received.

The last twelve months has witnessed a number of changes to insolvency legislation, much of which has been designed to try and protect a business/person from aggressive creditors such that time can be given to  consider how best to survive/contain the vagaries of Covid-19 and live to fight another day. The IP has been on hand to provide help in terms of understanding the changes and dealing with them as appropriate.

These examples of the type of task that can arise in IP’s standard day will hopefully demonstrate the caring and helpful side to the job.

The insolvency team at Meston Reid & Co have had a busy year and wish to thank all those who we have had the pleasure of engaging with and, one hopes, offering a little care and help to make a challenging situation a bit more palatable.  The team looks forward to providing a similar service in 2022 and meantime I wish every reader a fun-filled festive season.

The views in this article are those of Michael J M Reid, licensed insolvency practitioner and partner of Meston Reid & Co, chartered accountants, Aberdeen.  They do not purport to represent those of the firm in general.