Insolvency is the process wherein companies have to go through the procedure laid down on the Insolvency and Bankruptcy Code of India. It usually happens when corporations have become bankrupt or insolvent in common parlance when the company is not able to repay their debts.
It is not easy for any company to face the insolvency proceedings, so they hire insolvency firms to complete the task. It involves paying off the creditors by selling the assets of the company. All of these dealings are handled by an insolvency professional appointed by the Insolvency Board. If you want to get along smoothly with an insolvency firm, then you must consider the following points:
Check for license
The insolvency firms and practitioners are licensed by the authority to practice in the market. No practitioner company, firm, or individual can commence the practice of holding insolvency proceedings and representing the company for the Insolvency Board.
Only choose insolvency firms that have valid licenses. There are Recognised Professional Bodies (RPB), which have the authority to provide licenses to the firms; one of them is the Indian Institute of Chartered Accountants. You must check for a license before fixing a meeting with the firms to avoid any illegal activity.
Experience in client dealings
It is essential to do a detailed analysis of the insolvency firm you want to get along with. The experience of such firms is of critical interest to start the insolvency procedure smoothly.
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When the companies have prior experience and expertise in dealing with the client companies who have become insolvent, it increases the chances of better functioning in front of the board. There is no need to fear while requiring the past experience of practice; it helps maintain transparency between insolvency firms and client companies.
Is the firm trustworthy?
Any corporation can only get along with another corporation if it is reliable. You must choose those insolvency firms which have a past record of being trustworthy. The insolvency process is all about faith and dependency. All the assets, cannot pay back bounce back loan liabilities, and finances of the company are being handed over to an insolvency professional before the insolvency board.
Since the relationship with an insolvency firm is going to be long term, it is better to choose a trustworthy firm rather than regretting later selecting the wrong one. No matter what course of action is taken, reliability is one factor that helps you to get along with the insolvency firm.
Consider the fees charged
Since the corporation is already in the process of being declared insolvent, it will not have many resources to be paid to the insolvency firm in the form of fees. While choosing the insolvency professional, keep in mind the number of fees it is charging. Most of the firms falsely implicate higher prices from the companies.
To get an idea about the current costs being taken by the professionals, it is better to obtain information from the maximum number if insolvency turns and then quote your price. Several insolvency companies provide free-of-charge consultation in the beginning so that you can take advantage of it.
Analyze the communication skills
Insolvency firms are at the front end of the proceedings. Hence they are obligated to handle all the communication. By fixing fee meetings with the firm, you can assess whether the communication skills of the insolvency firm are up to mark. Formal insolvency procedures require good communication skills.
The insolvency companies have to deal with directors, debtors, creditors, shareholders, and investors of the insolvent company. Hence the proceedings can only run smoothly when the insolvency firm is good with communication.
Management of relationships
An insolvency firm is responsible for managing relationships with numerous stakeholders of the company. To get along with the insolvency firm, you must assess if it is able to build good relations with stakeholders, directors, and members or not.
Management of relations is not an easy task; it involves personal interaction and conviction to make dealings with clients successful. Usually, most of the companies in insolvency proceedings end up in trouble. But if the insolvency firms have the skill to manage relationships, they can rescue the companies.
Understanding the costs of liquidation
Costs of limitations are those expenses incurred during the process of liquidation. Not all companies which go through the insolvency procedure have to opt for liquidation, but this is a general happening. Most often, companies have to get liquidated because they are not left with any resources, so they make an application for winding up.
However, good insolvency firms take good care of the company finances by considering the estimated cost of the whole procedure in advance to manage the assets and liabilities. These tips can help to get along with the insolvency firm and proceedings of the Insolvency Board.