Insolvency practitioners (IPs) work in a fast-paced and demanding environment that offers diverse opportunities but requires a range of skills. An IP’s cases might include business rescue and restructuring, closing down insolvent companies, and supporting individuals in serious debt.
Essentially, their role involves dealing with people and businesses facing significant financial challenges so soft skills are in constant use alongside the vital technical know-how this profession demands.
So what skills are essential to the role of an insolvency practitioner?
Good communication skills are vital for an insolvency practitioner to fulfil their duties effectively. IPs have to deal with a number of stakeholders, including company directors, employees, suppliers, and customers, all of whom have different interests and needs, some of which conflict.
Strong communication is essential, therefore, in addressing the diverse concerns of all the parties involved in insolvency cases. Bringing a conclusion to a period of significant financial disruption requires great skill in formal and informal communications, particularly in the case of complex business insolvencies.
Strong business acumen
Corporate insolvency is complicated and understanding why a business has declined to the extent of liquidation demands considerable business acumen. An insolvency practitioner might move from construction cases, for instance, to struggling retail businesses and then on to compromised education institutions.
Understanding how all industries operate, dealing with the inherent conflicts of interest that arise, and acting in the best interests of the relevant stakeholders underpins a successful outcome – whether that means turning the business around or closing it down in an orderly manner.
Analytical skills are essential for insolvency practitioners to establish why a company has failed and to determine the root causes. The business’s failure might be due to director negligence or wrongdoing, for example, or simply a decline in the market.
If a company is liquidated the directors are investigated by the IP for instances of misconduct so being able to analyse the situation leading up to insolvency is a key part of the officeholder’s work.
Technology can help to streamline a complex process and provide insolvency practitioners with easier and faster ways to communicate with creditors and other stakeholders during corporate liquidations.
Advancing technologies, such as artificial intelligence and data analytics, have the power to transform how insolvency services are delivered. Onerous processes can be automated – classifying a substantial volume of business documentation, for example, assisting the IP in their investigations and the provision of the final report.
An insolvency practitioner needs to be a skilled negotiator, problem-solver, and decision-maker, so a pragmatic approach enables them to work logically through the day-to-day challenges of insolvency cases whilst addressing the relevant stakeholder interests.
Acting with common sense and practicality whilst understanding the best outcomes for stakeholders helps to smooth what can be a fraught situation and conduct an insolvency procedure effectively.
A diverse skill set is essential for insolvency practitioners
Combining these essential skills offers the best possible outcome for those affected by corporate insolvency, but also for individuals experiencing severe debt and businesses that can be rescued – through either informal advice or an official appointment.
It might be assumed that insolvency practitioners are either accountancy or law professionals, but in reality, a multi-disciplinary skill set is required to complete each appointment to the required professional standards.
The practical and interpersonal skills needed to fulfil their role help to save jobs, enable clients and stakeholders to bring uncertainty to an end, or overcome their financial difficulties and benefit from a fresh start.
About the author – Jon Munnery is an insolvency and company restructuring expert at UK Liquidators, a leading provider of company liquidation services to both solvent and insolvent limited companies.
Jon supports businesses at risk of insolvency and already insolvent as a result of creditor pressure and the build-up of business debts.