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Facts and Facets to Learn before Hiring an Insolvency Practitioner

The last thing any company would want is to cease the business due to financial crises. On the other hand, navigating a financially devastating condition in a business does not sound seamless either. So, what should you do when your company experiences business insolvency in Australia? Simply put, handling the burdensome job to a professional is good advice.

That’s where the dutiful role of an insolvency practitioner comes into being.

Wondering how to appoint a professional? Don’t worry if you haven’t yet dealt with a professional previously. Welcome to this post, where you can learn about a practitioner’s roles, responsibilities, and qualities before appointing one.

First Things First, Who Is an Insolvency Practitioner?

An insolvency practitioner or IP is a licensed professional who acts in relation to the insolvent individual, company, or partnership. When you appoint them for your company, they act on behalf of your firm. Contrarily, they can also help directors of solvent companies who liquidate their establishment to extract profits.

Who Approaches Them?

A creditor, court, or director of a financially distressed company can appoint them. The party initiating the formal insolvency process is responsible for paying the fees. But in another case, a disgruntled credited may start insolvency proceedings against a firm.

In such a scenario, the director is responsible for serving the WUP or winding up the petition. But in maximum cases, a director approaches an insolvency practitioner.

Qualities of a Proficient Insolvency Practitioner

Before appointing an IP, please look for the following qualities in them:

#1 Must be Patient to Understand the Business

Each business is unique and for an IP, understanding your business is the foundation step to their job. Their patience determines how meticulously they can understand your business. Also, look for a professional who can easily adapt to ever-changing circumstances. They will take time to discover underlying issues.

#2 Must be Resilient and Have Excellent Communication Skills

It takes immense perseverance to flourish as an IP or insolvency practitioner. Just as it is difficult to become a practitioner, it is equally challenging to remain one. Besides hard work and resilience, a professional should have a good understanding of communication skills. The expert can explain the advised route to directors. 

#3 Sector-Centric Experience

No doubt, experience helps in assisting clients more meticulously. And sector-specific experience may offer additional understanding to an IP. With these experiences, they can more accurately identify the root causes of a company’s financial distress. It also allows them to assist you with the right solution. 

Let’s say your company needs to improve liquidity & get back on track. In such a case, an IP may suggest optimising the business’s cash flow & credit control procedures.

#4 Must be Trustworthy

IPs must be honest while managing their duties and roles. Performing their roles requires complete integrity and transparency, given their duties’ sensitivity and nature. So, a competent IP must gain the trust of the clients. By doing so, they can assist directors in accomplishing the right outcomes.

Quick Tips to Consider When Choosing a Seasoned IP

While appointing an insolvency practitioner, ensure you consider the following factors beforehand:

  • Select someone who understands your business’s requirements and help you accomplish your goals
  • Seek an upfront structure of their fees and other costs 
  • IPs should have their registration with AFSA or ASIC

So, if your company is in financial distress, consult Insolvency Australia to hire an IP. Get insolvency updates, insights, and explanations before searching for a practitioner. You can also opt for live chat to learn about their services. 

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