What is insolvency all about?
Stitching up creditors; insolvency practitioners earning huge fees; rescuing businesses; clearing up a mess: these are examples of what insolvency means to people.
You may have thoughts of your own (please comment below), but some of my observations are:
- Directors or debtors don’t usually cause loss to creditors on purpose, although creditors often lose and directors/debtors can certainly be at fault.
- Insolvency practitioners are highly trained, qualified, skilled and regulated specialists, who are paid the same as other specialist accountants and lawyers. Their fees are approved by creditors.
- Most troubled businesses can be rescued if good advice and remedial action are taken soon enough. If left too late, that remedy may involve insolvency proceedings where creditors are not paid in full.
- There are always losers in a formal insolvency, which is why action should be taken early enough to avoid it. When that doesn’t happen, problems turn into a mess and people lose – sometimes a lot.
The theme is that whether you’re a creditor or a debtor it pays to seek advice early – from someone who really knows what they’re talking about.
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