The government has increased the fees it charges in certain insolvency cases. Insolvency trade body R3 has warned that the changes could undermine the UK World Bank insolvency ranking as well as weaken the position of creditors in those insolvency cases affected by the changes.
The government is now going to charge a fee of £6,000 in every compulsory liquidation and bankruptcy – even when the case is undertaken by a private firm of insolvency practitioners. In cases where the Official Receiver retains control of the case a further fee of 15% of all realisations will apply.
A further cause for concern comes with the news that the Official Receiver is seeking to expand the type of case it deals with. Whereas in the past complex cases with assets to be realised would be passed on to a firm of licensed firm of insolvency practitioners, it will now seek to retain more cases, even when a majority of creditors seek to appoint an insolvency practitioner firm.
“These developments are of particular concern given that Official Receivers are not overseen by a regulator or subject to the same stringent licensing requirements of insolvency practitioners,” said Stephen Wainwright, Partnern of Poppleton & Appleby “but of graver concern is the likelihood that it will be creditors who ultimately suffer as a result of these changes at a time when the insolvency profession has undergone substantial reform with regard to fee structures.”
In October last year, in response to the changes to the rules surrounding the fees of insolvency office holders, P&A took unprecedented steps to ensure transparency and value for money in all cases handled. This included a comprehensive review of our working practices and the implementation of a new regime that provides the highest levels of clarity and certainty for directors, lenders and creditors from the earliest possible moment in all matters we deal with.
This approach, delivered by a team with extensive knowledge and experience of implementing insolvency procedures means that a director of a struggling company can benefit from a rapid but rigorous appraisal of the company’s position and potential outcomes, whilst creditors can be assured that the strategy ultimately employed will deliver the maximum return possible, with no unpleasant surprises when they receive the final report at the conclusion of the insolvency.