The Insolvency Practitioners Association (IPA) is a membership body recognised for the purposes of authorising (licensing) insolvency practitioners (IPs) under the Insolvency Act 1986. Insolvency is a regulated profession under the Insolvency Act 1986 and anyone who wishes to practise as an IP needs to pass the three examination papers set by the Joint Insolvency Examination Board (JIEB) and meet the authorising body’s insolvency experience requirements.

The IPA, formally constituted as a company limited by guarantee, is a membership body for those in insolvency practice; those engaged in insolvency related work; and those with an interest in insolvency advice in the UK.

Insolvency means the inability to pay one’s debts as they fall due. Usually used in Business terms, insolvency refers to the inability for a ‘limited liability’ company to pay off debts.

This is defined in two different ways:

Cash flow insolvency - Unable to pay debts as they fall due. An indicator of this on the balance sheet, is if there is “net current liabilities”.

An insolvent company is bound by the regulations of the Company Voluntary Arrangement. The CVA is similar to the personal IVA (Individual Voluntary Arrangement) where an insolvency procedure allows a company with debt problems or insolvent to reach a voluntary agreement with its business creditors regarding repayment of all, or part of its corporate debts over an agreed period of time.

A Company Voluntary Arrangement (CVA) can be applied for by; the agreement of all directors of the company, the legal administrators of the company, or the appointed company liquidator.

In the UK, an administration order is a process designed to protect ltd companies from their creditors while a debt restructuring plan is carried out and presented to creditors and courts. This administration order process requires a licensed insolvency practitioner to act as the administrator appointed by the court.

The administrator is an officer of the court and an agent of the company on behalf of the insolvency practitioner, and is not personally liable for any contracts she or he makes on behalf of the company. He has the power to do anything necessary or expedient for the management of the affairs, business and property of the company.