What are the essential skills of an insolvency practitioner?

For this blog, we are excited to be collaborating with Jon Munnery, an insolvency and company restructuring expert at UK Liquidators – a leading provider of company liquidation services to both solvent and insolvent limited companies. As an insolvency and restructuring expert, Jon Munnery wrote this article providing industry insights and highlighting the essential skills of an insolvency practitioner.

What is an insolvency practitioner?

A licensed insolvency practitioner (IP) plays a vital role in helping businesses recover from financial difficulty and provides professional advice and support that can turn a company’s fortunes around.

One of the main roles of a licensed IP is conducting formal insolvency procedures, such as Creditors’ Voluntary Liquidation (CVL) and company administration. These official processes prioritise creditor interests and ensure businesses close down according to the strict insolvency laws in the UK.

These duties require particular skills to balance the needs of all parties to company insolvency – not a straightforward task due to the inherent conflicts of interest that arise from a business’s failure.

So what are the essential skills demanded by the insolvency profession?

What skills does an insolvency practitioner need in their work?

People skills

Being able to deal fairly and openly with all the people involved in a company’s liquidation – managing their conflicting interests and sharing often unwanted news about the financial situation – is a crucial skill for IPs, which is regularly tested.

Impacting people’s lives and finances in this way is a serious responsibility taken on by insolvency practitioners. Failed businesses, unpaid debts, and lost jobs can take a heavy toll on those involved, so good people skills are essential to carry out this work with sensitivity and understanding.

Oral and written communication skills

When a company enters liquidation, an IP needs to speak to creditors who may have lost significant sums of money, to directors and employees who may be in shock that the company is closing, as well as other stakeholders and professional counterparts.

Strong communication skills, both oral and written, ease the process of conveying unwelcome news and information and ensure the procedures are conducted according to statutory requirements.

Analytical expertise and problem-solving

Strong analytical and problem-solving skills are essential for insolvency practitioners given the diversity of the cases they manage. Each insolvency situation is different and they typically present a range of issues that need careful analysis before proceeding with a plan.

Although prioritising creditor interests is the key focus, an IP must analyse a company’s situation from all angles, which can be complex if a business is in financial distress but may be viable for the future.

Negotiation skills

When a company becomes insolvent it may not have to close down, and success commonly relies on the negotiations that take place between an insolvency practitioner and company creditors.
Naturally, creditors will seek as high a repayment amount as possible where a formal arrangement is being negotiated. An IP must balance this with affordability for the company and the likelihood of it being able to repay for the agreed duration.

Technical capability

Although an IP’s professional background is typically in accountancy or law, the technical skills required to conduct formal insolvency procedures merge the two professions and more.

It’s essential in day-to-day insolvency work to know the legal implications of taking certain routes and understand which would provide the best outcome for those involved, as is being able to use new and emerging technologies.

How do you become a licensed insolvency practitioner?

It’s common for people to join the accountancy or legal professions before becoming a licensed insolvency practitioner. Accountancy qualifications, such as ACCA and CIMA provide the practical and technical knowledge that’s required to transfer over to this career.

The professional insolvency qualification regime in the UK is rigorous. This is unsurprising given the responsibility an IP takes on but it offers the necessary legal, financial, and technical knowledge to carry out what are often complex insolvency appointments.

Ready to start your career in insolvency?

Best place to start your career in insolvency is by studying ACCA and CIMA qualifications, you can even try It for free for seven days to make sure it’s the right qualification for you.