If you are a company director reading this because HMRC has sent a letter you cannot stop reading, or a creditor is threatening a winding-up petition, here is the short answer first, then the detail nobody else gives you: an insolvency practitioner (IP) is a licensed professional, legally authorised to advise on, and take formal control of, an insolvent or potentially insolvent company on behalf of its creditors. For a director, that means one person who can tell you honestly what the options are, and who, once appointed, takes the legal and financial burden of closing or restructuring the company off your shoulders. This page explains what that role actually involves, and how it changes once a formal process begins. It is general information, not advice about your company.
Before any formal insolvency process begins, an IP can act as your advisor. At this stage, they work for you. You can ring them, ask blunt questions, get a candid read on your situation, and walk away without doing anything, and none of it is reportable or binding.
The moment a formal procedure starts — a creditors’ voluntary liquidation is passed, an administrator is appointed, a CVA is approved — the same person’s legal duty flips. They are no longer acting for you. They are an officeholder acting primarily in the interests of creditors, and under the Insolvency Act 1986 and the regulatory Statements of Insolvency Practice (SIPs), their job is now to maximise the return to the people you owe money to, not to protect you.
This is not a technicality. It is the single most important thing to understand before you pick up the phone, because it changes what you should and should not say, and when.
Every licensed IP who takes a formal insolvency appointment must submit a report on the conduct of the company’s directors to the Insolvency Service. Most directors hear “conduct report” for the first time after they have already appointed someone, and it understandably unsettles them.
Here is the balance most articles leave out: this requirement exists for every single insolvency, on every single company, regardless of how well or badly the director behaved. The vast majority of these reports find nothing that leads to any action at all. What the IP is actually looking for is a narrow, specific set of things — moving assets out of the company shortly before insolvency, paying some creditors preferentially over others, continuing to trade while knowingly making the company’s debt position worse, or failing to keep adequate accounting records.
Ordinary business decisions made in good faith — even ones that, with hindsight, did not work out — are not what this process is looking for. Directors who understand this upfront tend to find the whole process far less frightening than the ones who do not, simply because they know what is actually being assessed, and why.
Once formally in post, an insolvency practitioner’s day-to-day work typically includes:
Which of these apply, and how, depends heavily on the route — a liquidation, an administration and a CVA all involve very different day-to-day realities. The comparison of the five routes sets out how they differ; the shape above is the common thread across all of them.
Because IPs are licensed and regulated, the legal minimum of what they must do is the same across the profession. Where they differ enormously — and where it actually matters to a director — is in how they handle the parts of the job that are not strictly mandated:
A common misconception is that a director in financial distress has to personally fund the insolvency process out of pocket before anything can happen. In most formal insolvency procedures, the IP’s fees are paid from the company’s remaining assets, or agreed with and recoverable from creditors, rather than billed to the director personally upfront in the way a solicitor’s retainer might be.
The exact arrangement depends on the procedure and the company’s asset position, which is exactly the kind of thing worth clarifying in a first, no-obligation conversation before committing to anything. The costs page sets out the detail, including what happens where the company has no assets to pay from.
Since IPs are licensed and regulated by bodies authorised by the Insolvency Service, anyone’s licence status can be checked before speaking to them — the licence-checking guide explains how, in about five minutes. Beyond that baseline, the questions worth asking in a first call are:
The first call guide and the choosing a practice guide go through both in full.
Is an insolvency practitioner on my side?
Before formal appointment, yes — they act as your advisor. After appointment, their statutory duty is to creditors, not to you personally, though a good IP will still treat you fairly and keep you informed throughout.
Will an insolvency practitioner report me to anyone?
Every IP taking a formal appointment must submit a report on director conduct to the Insolvency Service, as a standard part of every case. This does not mean you are under suspicion — it is a universal statutory requirement, and the vast majority of reports lead to no action.
Do I have to pay an insolvency practitioner upfront?
Not usually out of personal funds — fees are typically met from company assets or agreed with creditors, depending on the procedure. Confirm this directly for your situation in an initial call.
Can I speak to an insolvency practitioner before deciding anything?
Yes, and you should. This first conversation is advisory, confidential and does not commit you to any formal process.