What Does an Insolvency Expert Do?

When a business hits serious financial trouble, the warning signs usually pile up slowly at first—late payments, tense supplier calls, rising debts—then all at once. It’s at this point that many owners feel stuck, overwhelmed and unsure who to turn to. That’s where an insolvency expert comes in.

Far from being “the people who shut businesses down”, insolvency professionals are actually problem-solvers. Their role is to help company directors understand their true financial position, explore all available options and choose a path that protects stakeholders as much as possible—sometimes even saving the business altogether.

Below is a practical look at what they actually do day to day, and how they support directors through one of the most stressful phases of running a business.

Assessing the Real Financial Position

Most struggling businesses don’t have a single clear problem. Instead, they have a mix of issues: unpaid tax, overdue supplier bills, cash-flow gaps, loans in arrears and maybe a few unprofitable contracts still dragging them down.

An insolvency specialist starts by cutting through the confusion:

• Reviewing financial statements, bank accounts and aged payables/receivables
• Identifying which debts are most urgent or legally critical
• Clarifying whether the business is technically insolvent (unable to pay debts as and when they fall due)

This assessment isn’t just about numbers. It’s about timing and risk—what happens if you continue trading as you are, and what happens if you act now? Without this clarity, directors are effectively guessing their way through a crisis.

Explaining Legal Duties and Risks for Directors

When insolvency is on the horizon, a director’s legal responsibilities change. Continuing to trade while knowingly insolvent can expose directors to serious personal risks, including potential claims from creditors or regulators.

An insolvency expert explains, in plain language:

• What the law expects directors to do once insolvency is suspected
• Which decisions could increase personal exposure
• The difference between responsible attempts to save a business and reckless trading

This guidance helps directors make informed decisions rather than acting from panic or misinformation. Often, just understanding the boundaries makes the next steps much clearer.

Exploring Restructuring and Turnaround Options

Contrary to popular belief, insolvency advice is not always about shutting the doors. In many cases, the first goal is to see whether the business can be stabilised and rescued.

Depending on the situation, an insolvency specialist may:

• Negotiate revised payment arrangements with key creditors
• Recommend cost reductions or divestment of non-core parts of the business
• Help restructure debt so that repayments are more manageable
• Assess whether a formal restructuring process (such as voluntary administration, schemes or other local mechanisms) could give the company breathing space

At this stage, the role overlaps with that of a business turnaround consultant—someone who focuses on operational and strategic changes to restore profitability, not just on legal processes. The best practitioners bring both angles together so that any restructuring has a realistic commercial foundation.

Managing Communication With Creditors and Stakeholders

When a business is under pressure, communication can easily break down. Suppliers become impatient, lenders tighten their stance and staff worry about their jobs. Unstructured conversations can make matters worse, leading to inconsistent promises and misunderstandings.

An insolvency expert brings structure and professionalism to these discussions. They can:

• Communicate with major creditors on the company’s behalf
• Present realistic proposals instead of vague assurances
• Manage expectations around timelines, repayments and outcomes

This doesn’t guarantee every creditor will agree, but it creates a fair, transparent process that’s much more likely to lead to cooperation than last-minute phone calls and panic emails.

Implementing Formal Insolvency Processes When Needed

Sometimes, even with restructuring efforts, it becomes clear that the business can’t meet its obligations or continue trading in a viable way. In those situations, an insolvency expert helps directors navigate formal processes.

Depending on the jurisdiction and circumstances, this might involve:

• Voluntary administration
• Liquidation or winding up
• In some cases, personal insolvency options for directors with personal guarantees

Their job is to make sure the process is handled correctly and lawfully, with proper documentation, fair treatment of creditors and clear communication at every stage. While this can be emotionally difficult for owners, doing it properly helps minimise further damage and allows everyone involved to move forward sooner.

Protecting Value Where Possible

Even in insolvency, there is often value that can be preserved. This might be a brand, customer list, intellectual property, key contracts or parts of the business that are still profitable.

An experienced advisor will look for ways to:

• Sell viable parts of the business as going concerns
• Transfer assets in a way that benefits creditors and preserves jobs where possible
• Avoid fire-sale scenarios that destroy value unnecessarily

The focus is on achieving the best possible outcome in a bad situation—rather than letting events spiral and value disappear through inaction.

Providing Emotional and Strategic Support to Directors

Directors often carry the emotional weight of an impending collapse long before anyone else knows. By the time they seek help, many are exhausted, anxious and unsure how to talk to staff, family or partners about what’s happening.

A good insolvency expert doesn’t just provide technical advice; they also act as a calm, steady presence. They:

• Offer a structured plan where there previously was none
• Help directors prioritise urgent tasks versus longer-term decisions
• Reassure them that there is a defined process to follow, even if the situation is serious

That sense of structure alone can be transformative, turning chaos into a series of clear, manageable steps.

When Should You Speak to an Insolvency Expert?

The biggest mistake many businesses make is waiting too long. Directors often delay seeking advice out of fear, pride or the hope that “one more good month” will fix everything. Unfortunately, time usually works against them—debts grow, options shrink and personal risk increases.

It’s wise to reach out for specialist guidance if you notice recurring cash-flow problems, mounting tax or supplier debts, or repeated reliance on short-term fixes just to get through each month. Early conversations don’t commit you to any formal process, but they do open up more options and give you a clearer picture of where you stand.

Final Thoughts

An insolvency expert’s core role is to bring clarity, structure and fairness to one of the hardest situations a business can face. Whether the outcome is a successful turnaround, a formal restructuring or an orderly wind-down, their work is about protecting stakeholders, complying with the law and giving directors a way forward.

If trouble is brewing, the most important step is the first one: stop guessing, and get informed. The earlier you seek professional guidance, the better your chances of finding a path that protects your business, your people and your peace of mind.