How Much Does an Insolvency Practitioner Cost?
Different firms of insolvency practitioners will have different fee structures and hourly rates, depending on their level of experience and the situation in which they are working. This makes offering standardised prices difficult. What we can explain, however, are the different fees that must be paid on any given case.
If you would like to discuss potential fees for a specific case, please make contact with one of our senior insolvency practitioners on 08000 746 757 for an immediate consultation.
Insolvency Practitioners Have a Legal Obligation to be Transparent over Remuneration
SIP 9 is the relevant documentation issued by the Joint Insolvency Committee (JIC) relating to practitioner’s fees. Each of the regulatory bodies has approved and adopted these statements and the Statement of Insolvency Practice 9 deals specifically with fees, costs and remuneration. Part of the requirements laid out in SIP 9 is that licensed IP’s must provide fee information subject to creditor approval. This is one of the many reasons you should only ever work with licensed practitioners.
Insolvency Practitioners may Charge on a Time Cost or Percentage Basis
While some IP’s will charge a standard hourly rate, others choose to recoup their fee as a percentage of the sum of money raised from the realisation of assets. Where a firm has opted to charge on a time cost basis, it is their responsibility to provide a clear estimate of fees and expenses before the procedure has begun. Some firms may approach creditors with this information before they are officially appointed.
Once the process has begun, any changes to the original estimated fee must be approved by company creditors.
What are the Costs Involved in Insolvency Proceedings?
Again, these differ depending on the type of procedure being carried out. Within the most common procedures, here are some of the standard things which bear a charge.
Statement of Affairs fee
Before any liquidation can commence, it is necessary to create a statement of affairs, which is a legal document summing up the company position in some detail. Insolvency practitioners will charge for producing this as well as calling the creditors meeting. The statement of affairs fee is either paid by directors, company itself, or it is considered an expense of the winding up.
General Liquidation Costs
During most liquidations, insolvency practitioners will charge for:
- The time spent realising company assets and distributing the proceeds to creditors
- Compliance work
- The legally required investigation into directorial conduct
- Court fees and disbursements
Company Voluntary Arrangement Costs
Company voluntary arrangements (CVA), structured payment plans approved by creditors, usually assign the insolvency practitioners fees from contributions paid into the arrangement. These include:
- A nominee fee – deducted from monthly payments once the CVA is in effect
- A supervisor’s fee – charged for ongoing CVA supervision
The Insolvent Business Owner Does not Usually pay Insolvency Practitioners Costs
For many directors considering insolvency, one of the biggest concerns is where the money is going to come from. In usual circumstances insolvency practitioner’s fees are taken from the realisation of company assets, with the remainder distributed amongst creditors. This means that it is the company creditors who pay the insolvency practitioners fees rather than the business owners.