Overview The Insolvency Act 1986 was created in Parliament to regulate both corporate and personal insolvency processes. It also regulates the Insolvency Practitioners’ role and states what qualifications you need to become a Licensed Insolvency Practitioner.
Enterprise Act 2002 This Act includes recent changes to the Insolvency Act 1986 in order to help create easier access to rescue opportunities for insolvent companies. It amended around 8 sections of the Administration process so insolvent companies had a greater chance of being saved before the sale of their assets to creditors during liquidation.
Insolvency Practitioners In order to become a Licensed Insolvency Practitioner you need to pass the JIEB exams and become a member of a regulatory body such as the IPA (Insolvency Practitioners Association). Once licensed, there is a section within the Insolvency Act that will regulate your duties during all insolvency procedures you are appointed on.
Wrongful Trading Section 214 Under Section 214 it states the guidelines for wrongful trading which occurs during the trading of an insolvent company. The Act states wrongful trading is where the director did not take; "every step with a view to minimising the potential loss to the company’s creditors". Wrongful trading is discovered during the director investigations during an insolvent liquidation process that are carried out by either the insolvency practitioner or official receiver depending on what procedure you are in.
Seek Professional Help If you think your company is trading insolvent, then the best thing to do would be to seek professional advice from a Licensed Insolvency Practitioner. Do not just bury your head in the sand, thinking continuous trading will solve your problem. If you seek help and advice then they can guide you to a solution that will help you avoid any misconduct.
Contact Us FA Simms & Partners have 5 Licensed Insolvency Practitioners who are all regulated by the IPA.
We have been helping SMEs for 35 years and offer free, no obligation advice regarding all insolvency situations for both corporate and personal circumstances.