Turnaround Specialist vs Insolvency Practitioner: Which Do You Need?
A turnaround specialist works with the directors to fix a struggling business while it keeps trading, and the directors stay in control. A licensed insolvency practitioner is the only person who can run a formal procedure such as a CVA, administration or liquidation, and once appointed as administrator or liquidator acts for the creditors as a whole. Many directors need the first; some need both; you only need an insolvency practitioner if a formal procedure is on the table.
Two different jobs, often confused
When a company runs into financial difficulty, directors quickly find that "corporate recovery" covers two quite different kinds of adviser. Both work with distressed businesses, both talk about rescue, and the two often work together. But they have different legal positions, different duties and different tools, and choosing the wrong one first can cost time the business does not have.
This guide sets out the difference in plain terms. For the wider picture of how a struggling company is brought back to health, start with our guide to business turnaround, and for the full list of rescue routes see business rescue and corporate recovery.
Turnaround specialist
Also called a turnaround practitioner or turnaround consultant. Engaged by the company to diagnose what has gone wrong and fix it: take control of cash, cut costs, renegotiate with lenders and creditors, arrange refinancing and change how the business operates. Some step in as interim managers or directors.
The directors remain in charge of the company. Read more about what a turnaround consultant does.
Licensed insolvency practitioner
An individual authorised under the Insolvency Act 1986 to act in formal insolvency procedures. Only an insolvency practitioner (IP) can be nominee or supervisor of a CVA, administrator, liquidator, or monitor of a Part A1 moratorium.
Once appointed as administrator or liquidator, the IP takes control and acts in the interests of the creditors as a whole.
Turnaround specialist vs insolvency practitioner: side by side
The table below compares the two roles on the points that matter most to a director deciding who to call. It describes the general position in England and Wales; individual engagements vary.
| Turnaround specialist | Insolvency practitioner | |
|---|---|---|
| Who they act for | The company, working with and reporting to the board. Aims to preserve the business and, where possible, shareholder value. | Before appointment, advises the company. Once appointed administrator or liquidator, acts in the interests of the creditors as a whole. |
| Regulation | Not a regulated profession as such; no statutory licence. Many are Turnaround Management Association members and some hold the CTP accreditation (awarded in Europe by the EACTP). Some are separately regulated as accountants or solicitors. | Must be authorised under the Insolvency Act 1986 by a recognised professional body, such as the IPA or ICAEW, with oversight from the Insolvency Service. Bound by the Insolvency Code of Ethics and Statements of Insolvency Practice. |
| When to use | As early as possible: falling profits, tight cash, covenant pressure, a lender review, creditor arrears. Also to build the operational plan behind any formal procedure. | When a formal procedure is needed or likely: a CVA, moratorium, administration, pre-pack or liquidation, or when advice on the formal options is needed. |
| Typical fee basis | Agreed with the company: day rates, monthly retainers, fixed project fees, success fees, or an equity stake in exchange for capital and hands-on support. | Pre-appointment work agreed with the company. Fees as officeholder are fixed by creditors (or the court) on a time-cost, fixed-fee or percentage-of-realisations basis, and paid from the estate. |
| Control of the company | Directors keep control. An interim director or chief restructuring officer joins the board and shares its duties. | Directors keep control in a CVA or moratorium. The administrator takes control in administration; directors' powers cease in liquidation. |
| Duty to creditors once appointed | Contractual duty to the company. If appointed a director, the same statutory duties as any director, including weighing creditors' interests once insolvency is likely. | Statutory duties. An administrator is an officer of the court and must perform their functions in the interests of the creditors as a whole. |
Neither role is "better". They do different jobs. The practical question is which job your business needs doing first, and our guide to what business turnaround costs explains how both kinds of fee compare with the cost of doing nothing.
Do I need an insolvency practitioner?
You need a licensed insolvency practitioner if, and only if, your company is going to use a formal procedure that the law says an IP must run or oversee. In England and Wales that means:
A Company Voluntary Arrangement
An IP acts as nominee, reporting on the proposal, and then as supervisor of the arrangement once creditors approve it. The directors continue to run the business. See our guide to the company voluntary arrangement (CVA).
A Part A1 moratorium
Breathing space from most creditor action while a rescue is put together. The directors stay in control, but an IP must act as monitor and confirm the company is likely to be rescued as a going concern.
Administration or a pre-pack
An IP is appointed administrator, takes control of the company and has an automatic moratorium to protect it while pursuing a rescue or a sale of the business. See company administration and pre-pack administration.
Liquidation
Where the company cannot be saved, an IP is appointed liquidator to close it and realise its assets for creditors. See voluntary liquidation.
A Part 26A restructuring plan is different: it is a court process under the Companies Act 2006 and does not legally require an IP, although it is often combined with other procedures or supported by insolvency specialists alongside lawyers.
You do not need an IP to run an informal turnaround, to refinance, to agree HMRC Time to Pay, or to negotiate with your bank, landlord or suppliers. That said, if insolvency is likely, it is sensible to understand the formal options early, even if you hope never to use them. Directors' duties shift towards creditors once insolvency is likely, and documented advice is part of how you show you acted properly. See directors' duties and responsibilities.
When a turnaround specialist is the right call
A turnaround specialist is usually the right first call when the business still has a viable core but the numbers, the cash or the relationships with funders are heading the wrong way. Typical triggers include:
Falling margins and tightening cash
Profits are sliding, the overdraft is fully drawn and suppliers are being stretched. Our guide to the warning signs a business needs a turnaround covers the early indicators.
Lender pressure
A covenant breach, a move to the bank's restructuring team or an independent business review. See surviving an independent business review.
Refinancing is needed
The existing lender wants to reduce its exposure, or the business needs new money to recover. See turnaround finance.
The board needs a credible plan
Lenders, investors or creditors want to see a costed recovery plan before they support you. See how to build a business turnaround plan.
The advantage of acting at this stage is that every option is still open, the directors keep control, and there is no publicity. The disadvantage of waiting is that options close one by one as creditors lose patience. Our turnaround methodology explains how a structured engagement moves from assessment to stabilisation and recovery, and how long a turnaround takes sets realistic expectations on timing.
When you need both
Many rescues use both kinds of adviser, each doing the job they are equipped for. A formal procedure deals with the balance sheet: it can bind creditors to a compromise or protect the company from enforcement. What it cannot do on its own is fix the pricing, cost base, working capital or management problems that caused the distress. If those are left untouched, the same pressures tend to return.
Common situations where the two work side by side:
A CVA built on a turnaround plan
Creditors vote on a CVA based on whether they believe the business can deliver the payments proposed. The turnaround specialist builds and implements the trading plan behind the proposal; the IP acts as nominee and supervisor.
A moratorium to buy time
A Part A1 moratorium, with an IP as monitor, holds creditors back while the turnaround specialist stabilises cash and prepares the longer-term solution, whether informal or formal.
Preparing for a possible administration
Where an informal deal may fail, a prudent board prepares a formal fall-back in parallel. The turnaround specialist keeps the business trading and its value intact; the IP advises on and, if needed, takes the appointment.
K2 is a turnaround firm. Since 2001 we have worked with owners and directors of UK businesses, typically £3m–£20m turnover, investing our time and expertise in their recovery. Our partners include Certified Turnaround Professionals, among them a past President of the Turnaround Management Association UK, as well as partners with insolvency practitioner backgrounds. Where a formal procedure is the right tool, we work alongside a licensed insolvency practitioner and focus on the operational turnaround that decides the outcome. You can meet our partners here.
Questions to ask before engaging either
Ask a turnaround specialist
- • Who exactly will do the work, and have they run or turned around businesses like mine?
- • Will you work inside the business, or advise from outside and leave implementation to us?
- • How are you paid — day rate, retainer, fixed fee, success fee or equity — and what is the total likely cost?
- • What professional memberships or accreditations do you hold, such as TMA membership or CTP?
- • What will you tell us if you think the business is not viable?
- • Which insolvency practitioners and lenders do you work with, and do you receive any referral fees?
Ask an insolvency practitioner
- • Which recognised professional body authorises you?
- • Which procedures do you consider realistic for this company, and why?
- • Are you advising the company, and should the directors take separate personal advice?
- • How will your pre-appointment fees and any officeholder fees be set and approved?
- • If you are later appointed, how will you manage any threat to your independence arising from advising us now?
- • What happens to employees, personal guarantees and key contracts under each option?
Whoever you speak to, be cautious of anyone who promises a guaranteed result, presses you to sign on the first call, or asks for a large upfront payment before explaining what they will do. Genuine advisers will be clear about what they can and cannot achieve. If you want a quick, independent read on where you stand before any of those conversations, try our free 2-minute business survival check.
Frequently asked questions
What is the difference between a turnaround specialist and an insolvency practitioner?
A turnaround specialist works for the company, alongside the directors, to fix the business while it keeps trading: cash control, cost reduction, lender and creditor negotiation, refinancing and operational change. A licensed insolvency practitioner is the only person who can be appointed to run or supervise a formal insolvency procedure such as a CVA, administration or liquidation. Once appointed as administrator or liquidator, an insolvency practitioner acts in the interests of the creditors as a whole, not the directors.
Do I need an insolvency practitioner?
You need a licensed insolvency practitioner if your company is going to use a formal insolvency procedure: a CVA, administration, a pre-pack, liquidation or a Part A1 moratorium, which needs an insolvency practitioner as monitor. You do not need one to run an informal turnaround, refinance, agree HMRC Time to Pay or negotiate with lenders and suppliers. If insolvency is likely, it is sensible to take advice on the formal options early, even if you hope never to use them.
Are turnaround practitioners regulated?
Turnaround work is not a regulated activity in the UK in the way insolvency work is, so there is no statutory licence for turnaround practitioners. Many are members of the Turnaround Management Association and some hold the Certified Turnaround Professional (CTP) accreditation, awarded in Europe by the EACTP. Individual practitioners may also be regulated in another capacity, for example as chartered accountants or solicitors. Insolvency practitioners, by contrast, must be authorised under the Insolvency Act 1986 by a recognised professional body such as the IPA or ICAEW.
Who does an insolvency practitioner act for?
Before any appointment, an insolvency practitioner advises the company on its options, not the directors personally. Once appointed as administrator or liquidator, they act in the interests of the company's creditors as a whole. As nominee and then supervisor of a CVA, they oversee the arrangement fairly between the company and its creditors while the directors continue to run the business. Directors who want advice on their personal position should take separate advice.
Can I use a turnaround specialist and an insolvency practitioner together?
Yes, and in many rescues that is the best combination. The turnaround specialist works on cash, trading and the business plan that creditors must believe in; the insolvency practitioner runs the formal procedure, such as a CVA or administration, that deals with the debt. A formal procedure resolves the balance sheet, but it does not fix the operational problems that caused the distress, which is why the two roles complement each other.
Will I lose control of my company if I appoint an insolvency practitioner?
It depends on the procedure. In a CVA and a Part A1 moratorium the directors stay in control, with the insolvency practitioner acting as supervisor or monitor. In administration the administrator takes control of the company and the directors' management powers can only be exercised with the administrator's consent. In liquidation the directors' powers cease. With a turnaround specialist working informally, the directors keep full control throughout.
Not sure which adviser you need?
K2 offers a no-charge, confidential initial assessment. We will tell you honestly whether your business can be turned around, whether a formal procedure is likely to be needed, and what to do first. Find out more about our approach to business turnaround.
30+ years turnaround experience · Confidential consultation · Honest about viability
Related Guides
Understand the advisers and the routes open to your business.
What Does a Turnaround Consultant Do?
Role, engagement scope, pricing and how to choose one
Business Rescue & Corporate Recovery
Every rescue route open to a UK company in difficulty
Company Voluntary Arrangement (CVA)
Meaning, process, cost and who qualifies
Company Administration
How administration protects a business and what happens next