Insolvency is a difficult time for all involving high levels of emotional strain. Creditors face financial loss. Employees face losing their way of employment along with losing the entitlements they have worked for. The business directors of the firm may lose their houses or any other assets. Insolvency law seeks to provide a balance having a regulated and controlled number of guidelines so the most beneficial outcomes can be carried out for all involved. Giving this balance means that every person is sorted out as fairly as possible in the circumstances by an impartial umpire. By doing this some semblance of order is brought to bear on what is otherwise a situation of chaos and disharmony.

Insolvency practitioners in Australia have to hold tertiary accounting qualification. The actual entry requirements of the profession are established legally. To perform as a liquidator an insolvency practitioner needs to be registered with the ASIC. One of the best practitioners generally are a member in good standing with an industry body such as Insolvency Practitioners Association of Australia (IPAA). Membership of such bodies provides confidence that the liquidator has sufficient, relevant and current experience in the insolvency field. The IPAA sets down a Code Of Professional Practice which the people must conform. The Code states that Practitioners:

• are fiduciaries. They’re entrusted with property from the insolvent and necessary to cope with it in compliance using the law and consistently using the responsibilities and accountabilities of fiduciaries;
• are appointed to implement the insolvency regime and to deal with and determine the rights and entitlements of all the parties involved;
• owe responsibilities to the creditors in general, not just to one creditor (except where appointed as a receiver or receiver manager) and other parties;
• are experienced and qualified professionals who are necessary to show high levels of application and professional competence;
• are given to court and regulating supervision;
• have certain legal obligations under the law, for example to:
  • investigate the reason why for that insolvent’s financial failure;
  • set of the final results of individual research to creditors and the regulator; and
  • pursue preferences and claims for insolvent trading when it is in the interest of creditors to do this.
• must exercise a high level of commercial and professional judgment;
• be employed in difficult problems, frequently including distressed parties, competing needs, strict due dates, and complex legal, financial and factual issues;
• could be personally accountable for debts incurred during an administration;
• are legally qualified to be remunerated for the work they actually do as a priority payment in the administration; and
• every once in awhile will accept and complete administrations even though there are insufficient funds to pay their remuneration and disbursements. (Source: Code Of Professional Practice)

The Code Of Professional Practice goes on to describe how an insolvency practitioner should conduct themselves.

Conduct

• Professionals should really be independent and portray the highest amounts of integrity and impartiality.
• Members have to take action on their duties in a timely way with clear, open and honest communication.

Remuneration

A practitioner is permitted to receive remuneration for work correctly performed after approval.

Practice Management

• Members must run their own business with effective systems in place for quality assurance, compliance management, risk management and complaints management.

The Code Of Professional Practice then particularly describes what sort of specialist should conduct themselves within the regions of:

• Integrity, Objectivity & Impartiality
• Independence
• Dealing with Property
• Competition and Promotion
• Practice Quality Assurance
• Limited Value of Disclosure
• Communication
• Timeliness
• Compliance Management
• Risk Management
• First Remuneration Principle – Necessary and Proper
• Second Remuneration Principle – meaningful disclosure
• Third Remuneration Principle – approval before drawing
• Complaints Management

Insolvency is a difficult and complex time with intersecting aspects of business, accounting and law. The effects of possibilities achieve far beyond the organisation struggling with insolvency. Insolvency practitioners needs to be skilled and need the capability to show high levels of commercial judgment and business acumen.