For our latest blog, we have a guest post from Chris Bristow at Real Business Rescue.
Insolvency represents an exciting and rewarding career which sits as much within the finance arena as it does within law. Insolvency professionals will either work for an independent insolvency firm, or as part of a firm of lawyers or accountants.
In a nutshell, a career in insolvency involves working with financially distressed businesses or individuals who require professional intervention to deal with their financial woes. Many insolvency firms will offer both personal and corporate insolvency advice, although many insolvency professionals will choose to specialise in one or the other.
- Corporate Insolvency – Corporate insolvency involves dealing with distressed limited companies and their shareholders/directors. Depending on the financial position of the company coupled with its long-term viability, options may include a restructuring of the company’s operations through a process of administration, or entering into formal negotiations with creditors by way of a Company Voluntary Arrangement (CVA). If the company’s problems have taken it beyond the point of rescue, there may no alternative other than to close the company down by placing it into liquidation.
- Personal Insolvency – When working in personal insolvency, you will be helping individuals understand their options for dealing with unmanageable debt which may include Individual Voluntary Arrangements (IVAs) and Bankruptcy. Other options are available to individuals in Scotland.
Roles within insolvency
A career in insolvency offers a huge amount of growth and further career opportunities if an individual is prepared to work hard. While each firm will structure their insolvency department in their own way, typical roles on offer will include:
- Insolvency Administrator – This is how many insolvency professionals careers start. While some individuals will enter the industry with a background in accountancy or law, there are no specific entry requirements or qualifications needed, instead you will learn ‘on the job’. A typical days’ work will involve filing statutory notices at Companies House and liaising with creditors including HMRC.
- Insolvency Manager – With several years’ experience under your belt as an Insolvency Administrator, you can move up the career ladder to a management position. As an insolvency manager you will be expected to manage your own caseload and work closely with the appointed insolvency practitioner; you are likely to have a team of insolvency administrators working underneath you who you will line manage. You may also find yourself taking the initial phone call from a distressed director, providing help and advice and talking through the available options. At this stage in your insolvency career you may wish to solidify your knowledge by sitting the Certificate of Proficiency in Insolvency (CPI) exam, an industry recognised qualification that demonstrates your technical and practical knowledge of the sector.
- Licensed Insolvency Practitioner – In order to become a licensed insolvency practitioner you will need to successfully pass a series of gruelling exams known as the JIEB (Joint Insolvency Examination Board). There is one exam for personal insolvency and another one for corporate insolvency. Insolvency practitioners can hold a full license (upon passing both exams) or alternatively a partial license in either personal insolvency or corporate insolvency if just one of the exams has been passed.
In addition to the JIEB, aspiring insolvency practitioners must also record a minimum of 600 hours of higher experience in insolvency administration within the preceding 5 years as well as registering with one of the five recognised RPBs in order to obtain their licence. Once licensed, an insolvency practitioner will then be legally allowed to take insolvency appointments according to their license, from company liquidations and personal bankruptcies, through to administrations and Company Voluntary Arrangements (CVAs).
Skills you will need
In addition to the formal qualifications required to become a licensed insolvency practitioner, highly developed soft skills in areas such as empathy and the ability to explain complex legal procedures in simple, understandable terms, are also coveted within the industry.
You will be required to liaise with a number of parties as part of any insolvency case, including directors/shareholders, outstanding creditors, HMRC, and any employees of the business. In many cases you will be delivering news which is unwelcome, such as notifying employees of redundancy, or explaining to creditors that they will not receive the money back they are owed. You must therefore have the communication skills required to deal with these potentially uncomfortable conversations and ensure each party understands how they will be affected by the insolvency.
In addition, insolvency legislation is ever-changing, therefore a commitment to ongoing training and development to ensure skills and knowledge are kept up to date is a must.
Considering a career in insolvency? Here’s why you should!
- Variety – As insolvency sits between the law and finance, you will find that your workload remains interesting and varied. One day you could be completing accountancy based tasks such as preparing a Statement of Affairs, while the next you are building up evidence to support a case against a director for wrongful or fraudulent trading.
- Rewarding – While there may be some negative connotations towards the insolvency industry from those who do not fully understand how it works, the reality is that formal insolvency solutions offer companies or individuals a way out of a situation which has become simply unmanageable. Helping a distressed individual understand their options and working alongside them to put a plan in place can be an extremely rewarding part of the job.
- Security – Insolvency is a counter-cyclical industry which means demand for the service is likely to increase the worse the economy gets. This is in contrast to many other occupations where a thriving economy comes with increased demand. This can provide a reassuring element of job security in otherwise challenging times.
About the author – Chris Bristow is a business debt expert at Real Business Rescue, company rescue, restructuring and liquidation specialists with a wealth of experience in supporting company directors in financial difficulty.