Details of the work that an Insolvency Practitioner and his/her staff typically undertake on an insolvency appointment are as follows:

Administration and Planning

Where a task does not fall into any of the categories referred to below but is necessary for the proper administration of the case, it constitutes administration and planning.

Case planning is necessary in order to ensure the orderly and efficient winding up of the insolvent entity’s estate and the same applies to conducting periodic case reviews and maintaining both physical case files and electronic case details on internal case management systems.

We are required to deal with routine correspondence with banks, accountants, solicitors etc.

There are certain tasks that the Insolvency Act 1986, the Insolvency Rules 1986 (as amended) and other rules and regulations, including best practice guidance, require us to undertake. For example, there are various bodies that must be notified of our appointment, as well as the creditors, and we usually have to advertise the fact that we have been appointed. We must keep proper accounts and administer a bank account on each case, so that we can report to creditors on the monies that we receive and what we pay out. In addition, we must have a bond in place to protect against estate funds being misappropriated.

Statutory requirements in the various insolvency procedures are slightly different and so the above provides an indication of the tasks that make up this area of work.

Case Specific Matters

This category will include any work carried out that does not fall under any of the other work types provided. These could be matters of an exceptional or time consuming nature.

Creditors

Dealing with creditors’ claims and correspondence can be very time intensive especially where there are a large number of creditors (this includes employees). Where there are sufficient funds realised to make a distribution to creditors, before we are able to do so, it is necessary to formally review and adjudicate claims to determine the level at which they are to be admitted.

If there are employee claims to be handled in relation to unpaid redundancy, notice pay, salary and/or holidays, this can be time consuming depending on the number of employees and whether there are any disputes between employees and the insolvent entity. In addition, if an entity has a pension scheme/s then this needs to be dealt with. The introduction of Auto-enrolment has increased the number of companies that operate pension schemes and this is very likely to increase further in the future.

We are required to prepare and send statutory reports, such as annual progress reports and final reports, to creditors. In addition, if a liquidation committee has been established, then any work undertaken in dealing with, and reporting to, the committee shall fall under this category.

Investigations

In administration and creditors’ voluntary liquidation cases, we are required to report to the Secretary of State on the conduct of the directors. This means that we are obliged to carry out investigations into how the directors operated the company prior to the insolvency.

In all insolvency procedures we undertake investigations to determine whether there are claims that can be pursued in relation to transactions which have had the effect of diminishing the entity’s assets. This includes reviewing (and storing) an entity’s books and records. We also consider other claims that the company or debtor might have which, if pursued, would result in a recovery for the estate. Any time spent that is related to such work will fall under this heading.

When investigations have been completed and a claim has been established against a third party, and crucially, that the claim (or part of the claim) has been accepted as being due and payable by the third party, any further work carried out shall be included in the category below, ‘realisation of assets’.

Realisation of Assets

This includes all work associated with the sale or other disposal of the assets of the insolvent entity. It also includes the recovery of any debts owed to the company or the debtor, dealing with any parties that claim that they have retained ownership of goods supplied to the company or debtor and dealing with claims that assets in the company’s or debtor’s possession are not owned by the company or the debtor.

As detailed under the ‘investigations’ category above, it also includes realising assets that have been identified as a result of the investigations process, such as sorting out arrangements for the mechanics of repayment, ensuring any settlement agreement is adhered to and dealing with agents.

Trading

This category applies where the business of the company or the debtor is to be carried on during the insolvency. This usually happens where we think that more value will be obtained by selling the business as a going concern or that the completion of work, orders or other business carried on by the insolvent entity will lead to a better recovery for the estate.

Version 1: December 2015