Accepting an instruction on insolvency

As with instructions in a solvent context, it is important that the practitioner and the client agree at the outset:

• the scope of the instruction (if necessary, this can be varied during the instruction) and
• the appropriate fee (again this can be varied during the course of the instruction, if appropriate).

Note that in an insolvency context, it is rather more likely that the costs charged by a practitioner will be disclosed to creditors and other interested third parties and will therefore be open to scrutiny by them.

Creditors will also have a keen interest in ensuring that realisations are maximised, particularly where they are likely to be lower than the amount of the outstanding debt. A practitioner's marketing methodology and valuation assessment is likely also to be subject to particular scrutiny.

A practitioner should always pay attention to who is ultimately responsible for their fees in an insolvency context and should ensure that there is either a commitment to meet them from a solvent entity, or some other appropriate form of security to meet those fees. However, if being asked to advise by an insolvency practitioner appointed to the company, the practitioner’s fees will usually be paid out of the insolvent estate as an expense.

Documents

Practitioners should carefully consider the documents required from the client to conduct their retainer correctly.

While not an exhaustive list, consider the following documentation, if appropriate, in each case:

• title deeds and evidence of ownership
• evidence of the appointment of the practitioner as receiver, or the appointment of the insolvency practitioner
• all lease (and where appropriate sublease) documentation
• loan and security documentation, and
• insurance documentation.

Professional indemnity insurance (PII)

Practitioners should ensure they are adequately insured for dealing with insolvency matters. The practitioner's insurer or broker would expect to be advised if the practitioner were taking on a fixed-charge receivership appointment, due to the wider duties assumed by the practitioner in this context.