reviewed-by
Reviewed by
Chris Andersen
Chris Andersen
Reviewed by Chris Andersen

Chris became an Insolvency Practitioner in 2014 and is currently regulated by the IPA.

He is experienced in contentious insolvency with excellent analytical skills and strong knowledge of both general and technical insolvency matters.

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17th June 2026

You are a trade creditor owed £42,000 by a company that went into liquidation in March. Six months later, the IP’s progress report lands in your inbox. Asset realisations of £58,000. Office-holder remuneration of £31,400. Disbursements of £4,200. Estimated dividend to unsecured creditors: 4p in the pound.

Your share of the dividend, before you spend a minute on the file, is £1,680. The fees consumed more than half the realised value of the estate, and the SIP 9 disclosure that arrived with the original notice was four pages of generalities about hourly rates. You wonder, fairly, whether anyone is checking.

That checking is your job, not the regulator’s. We see this exact arithmetic on cases we triage every week, and the gap between what creditors are entitled to do about IP fees and what creditors actually do about them is the editorial point of this guide.

Insolvency Practitioner Fees at a Glance

UK insolvency practitioner fees are regulated under SIP 9 and the Insolvency (England and Wales) Rules 2016. Fees can be charged on a fixed-fee, time-cost, or percentage basis (or a combination), and the basis must be approved by creditors (or, in MVL, by shareholders). The IP must provide a fees estimate, give creditors the right to challenge under rule 18.34, and disclose any related-party arrangements. The fees come out of the estate before unsecured creditor distributions.

Quick Answer: How IP Fees Are Set and Approved

Insolvency practitioner fees in UK liquidations and administrations are set on one of three bases (time-cost, fixed, or percentage of asset realisations), disclosed up front under Statement of Insolvency Practice 9 (SIP 9), and approved by creditors at a decision procedure.

Where creditors are dissatisfied, the formal challenge route is an application to court under rule 18.34 of the Insolvency (England and Wales) Rules 2016, within eight weeks of the fee decision being notified to us.

Who Approves Insolvency Practitioner Fees

In a Creditors’ Voluntary Liquidation, the body of unsecured creditors approves the fee basis and quantum at the decision procedure, by simple majority in value of those voting. Where a liquidation committee has been formed, the committee takes that role on behalf of creditors. In administrations, the same logic applies but secured creditors weigh in earlier.

If neither creditors nor a committee approve, the IP must apply to the court for the basis to be fixed. That happens less often than you would expect, because most IPs work hard to get a fee resolution passed at the first decision rather than carry court-fixing costs.

Main Creditor Right Around IP Fees

The right that matters is the right to challenge. Under rule 18.34, any creditor (regardless of debt size) can apply to court to vary the basis or amount of the office-holder’s remuneration if it appears to be excessive. The right is real and it is statutory.

The honest editorial line we take is that the right is also, for most small creditors, economically unusable. Court fees, solicitor time, and the IP’s own costs of defending the application come out of the estate before any reduction lands. Below a certain debt size, in our experience, the maths kills the challenge before it starts.

What to Do Next If You Disagree with IP Fees

Read the SIP 9 disclosure first, before you read the progress report. Calculate the fees as a percentage of realised assets and as a percentage of your expected dividend. If those two figures look wrong, the next step is to write to the IP requesting more detail rather than going straight to court.

If the response is thin, the practical lever is to coordinate with other creditors before the next progress report. Coordinated objection at a fee resolution costs nothing and changes outcomes more often than rule 18.34 ever does.

What Are Insolvency Practitioner Fees?

Time-Cost Basis (the Most Common Method)

On a time-cost basis, the IP charges by hours worked at published charge-out rates, with each grade of staff (partner, manager, senior, administrator) priced separately. A partner rate of £475 per hour and an administrator rate of £140 per hour is typical for a mid-sized firm. The fee is the sum of hours multiplied by rates, drawn against the estate as work is done.

Time-cost is the default in complex cases (administrations, contested liquidations, anywhere with antecedent transaction work) because nobody knows in advance how many hours the case will eat.

It is also the basis most likely to drift if creditors are not paying attention. A case that estimates £35,000 of fees can run to £55,000 across two progress reports without any individual entry looking unreasonable. We see that pattern often enough that it shapes our default scrutiny.

Fixed-Fee Basis

A fixed fee is a single quoted sum for the whole of the office-holder’s work, sometimes split into stages (pre-appointment, appointment to first dividend, final). It is most common in straightforward CVLs where the asset position is clear and the IP is confident the case will not throw up surprises.

From a creditor’s point of view, fixed fees are the easiest to assess. You know the total before you vote, and the IP carries the risk of overrun. The trade-off is that an experienced IP only quotes a fixed fee on cases they know will not exceed it, so the quote tends to be priced for comfort rather than for the median case.

Percentage of Asset Realisations Basis

On this basis the IP takes a fixed percentage of what they realise from the estate. Typical scales are higher percentages on the first slice (often 20% to 25% of realisations up to a threshold) and lower percentages thereafter. It is the natural choice for cases dominated by recoveries from book debts, plant and machinery sales, or property realisations.

The alignment is good in theory: the IP is rewarded for getting more in. The problem in practice is that on small estates, where the percentage produces a fee that does not cover the IP’s actual time, you sometimes see a hybrid resolution that mixes percentages with a time-cost top-up, and that hybrid is harder for creditors to scrutinise than either method alone.

How IP Fees Are Set and Disclosed (The SIP 9 Standard)

SIP 9: What the IP Must Disclose Up Front

Statement of Insolvency Practice 9, issued by the Recognised Professional Bodies through R3, is the regulatory transparency standard for IP remuneration.

Before creditors are asked to approve fees, the IP must disclose the proposed basis, an estimate of the work to be done, the expected fee in money terms, and (on time-cost cases) the charge-out rates for every grade of staff who will work on the file.

The disclosure must also explain what creditors will get if the work goes ahead, in cash and as a likely dividend. SIP 9 is not optional; it is the standard the IP’s authorising body audits against, and a thin SIP 9 disclosure is the single clearest signal that the fees are worth a closer look.

Time-Cost Schedules and Hourly Rates

On a time-cost case, the SIP 9 schedule must show every charge-out rate, the estimated hours by grade, and a narrative explanation of what the work involves.

A good schedule reads like a project plan: investigation of antecedent transactions, statutory reporting, asset realisation, distribution, closure. A weak one collapses everything into a one-line “case administration” entry that says nothing about which grade of staff is doing the work.

If you are reading the schedule as a creditor, the question to ask is not “is the rate too high” (rates broadly track firm size and location) but “is the partner rate being charged for work that should sit with a senior or an administrator.” Creep at the partner level is where time-cost cases lose proportion fastest.

Estimated Fees vs Actual Drawn Fees

SIP 9 requires a fee estimate at the outset and a comparison of actual drawn fees against that estimate at every progress report. Where the actual exceeds the estimate, the IP must explain why and, in many cases, must seek further creditor approval before drawing the additional sum.

This is the disclosure where small problems become visible. A 10% overrun explained by an unforeseen book-debt dispute is normal. A 40% overrun explained as “increased complexity” without specifics is the moment to write back asking what the increased complexity actually was.

The progress report is the document SIP 9 polices most directly, and creditors who do not read it forfeit the protection it was written to give. Our experience is that the cases where fees end badly almost always trace back to a progress report nobody on the creditor side opened.

How Creditors Approve Insolvency Practitioner Fees

Resolution at Decision Procedure (Approval Threshold)

The fee resolution is a separate vote at the creditors’ decision procedure, taken alongside the appointment resolution. It passes on a simple majority in value of the unsecured creditors voting. The chair, normally the IP, admits or rejects claims for voting purposes and records the result on the chairperson’s report.

One practical point creditors miss: the fee resolution can be voted on separately from the appointment. You can confirm the IP and reject the proposed basis, or approve the basis and ask for a different fee cap, or reserve the question for a creditors’ committee. Many creditors treat the package as all-or-nothing; it is not.

Liquidation Committee Approval (Where One Exists)

A liquidation committee is a small group of creditors (three to five) elected to oversee the IP between formal decisions. Where a committee exists, fee approval is the committee’s job rather than the general body of creditors’. The committee meets, asks questions, and votes.

Committees are the most effective fee-control mechanism the rules provide, and they are the most under-used. If your debt is large enough to justify the time and you trust two or three other creditors, requisitioning a committee at the first decision is the lowest-cost way to keep meaningful control over the case.

When the Court Sets the Fees

If neither the creditors nor a committee approves, the IP applies to court for the basis to be fixed under rule 18.23. The court applies a reasonableness test against the work done, the value and nature of the property dealt with, and the complexity of the case. Court-fixed fees are the exception, and the cost of the application is itself an expense of the estate.

From a creditor’s perspective, the court route is rarely the one creditors trigger. It is the route an IP triggers when creditor engagement is so low they cannot get any resolution passed. If you are a creditor watching that happen, it is a signal that creditor coordination has failed and the case is drifting, not a sign that the court will protect the dividend for you.

How Creditors Can Challenge IP Fees

Application Under Insolvency Rule 18.34

Rule 18.34 of the Insolvency (England and Wales) Rules 2016 lets any creditor (or member, in solvent liquidations) apply to court to vary the basis or amount of remuneration where it is excessive. The application is to the court that has jurisdiction over the insolvency, supported by a witness statement explaining why the fees are excessive and what reduction is sought.

The court can reduce the fee, vary the basis, or fix a different sum. Successful challenges are rare in reported cases because the court applies the same reasonableness test as on a fee-fixing application: the work actually required, the complexity, the value at stake. A challenge based on “the fees feel high” rather than on a costed alternative analysis tends to fail.

Time Limit for Challenge

The deadline is eight weeks from the date the relevant fee determination is sent to the creditor. Miss the eight weeks and the right is gone for that period of fees, although fresh fees notified later carry their own eight-week window. Diary the date the moment the progress report arrives; do not assume you can challenge later when the dividend is finalised.

The eight-week clock is one of the practical reasons creditors who only react when the final dividend lands have already lost the right to do anything about the fees that produced it. SIP 9 disclosure is what triggers the clock, which is why it is worth reading on the day it arrives, not three months later.

Grounds That Tend to Succeed (and Those That Don’t)

Grounds that have produced reductions in reported challenges include partner-level work being charged when administrator-level work was the appropriate grade, fees that exceed the SIP 9 estimate without a documented explanation, time entries with no narrative beyond “case administration”, and disbursements charged at firm cost-recharge rates without disclosure that they include a margin.

Grounds that fail are usually about quantum without analysis: “the fees are too high relative to the dividend” without a comparable case benchmark, or “we expected more recovery” without evidence the IP failed to pursue an asset. The court is interested in process and proportion, not in your disappointment with the outcome.

When It Is Actually Worth Challenging IP Fees

Calculate Fees as a Percentage of Expected Dividend Before Deciding

The first calculation we run is fees over expected dividend, not fees over realisations. If the IP’s remuneration is consuming more than 30% of the cash that would otherwise reach unsecured creditors, the fees are, in our view, at least worth questioning. Below 15%, the cost of challenge almost never recovers itself for us.

The crude rule we apply when triaging cases is this: a £40,000 unsecured creditor in an estate where total fees are £30,000 against £45,000 of realisations is paying around £6,000 of fees out of their pocket through dividend dilution. A 20% reduction in fees, if achievable, recovers around £1,200. That number sets the ceiling on what the challenge can rationally cost.

Audit the SIP 9 Disclosure for Hourly-Rate Creep

Open the SIP 9 schedule and check three things: how many partner hours appear, what those hours were spent on, and whether the same task could plausibly have been done by a senior or administrator.

If the partner column is weighted heavily towards routine statutory work (writing the progress report, preparing notices, filing returns) rather than antecedent transaction analysis or contentious creditor work, that is the hourly-rate creep the rules are designed to expose.

This audit costs nothing, takes around an hour for a competent finance person, and is the basis a court would expect a serious challenge to begin from. Without it, you are arguing on impression rather than on evidence, and that is the version of the case we routinely watch fail.

Coordinate with Other Creditors If Combined Debt Exceeds 25%

A single small creditor challenging fees alone is the worst-positioned challenger. A coordinated group representing more than a quarter of the unsecured debt by value can call a creditors’ meeting under the rules, requisition a committee, and table a fresh fee resolution without going near rule 18.34. That is the cheaper, faster, more effective path nine times out of ten.

If you are sitting at £42,000 in an estate of £600,000 of unsecured claims, ring the next two largest creditors before you write to your solicitor. The conversation we recommend is short: do you agree the fees look high, are you willing to put your debt behind a coordinated objection, and which of us writes to the IP first.

See our note on recovering from an insolvent company for the wider playbook on creditor coordination.

Mistakes Creditors Make About IP Fees

Treating the First Notice as the Last Chance to Engage

Many creditors read the first decision procedure notice, register the headline fee figure, and then file the rest of the correspondence unread. The fee resolution is rarely the moment the case actually moves; it is the progress reports six and twelve months later, where actual drawn fees are reconciled against the estimate, that you have the cleanest evidence base for an objection.

If you only ever look at the first notice, you have no idea whether the case stayed inside the estimate or quietly broke through it. The progress report is where SIP 9 does most of its work, and creditors who skip it are choosing not to use the protection.

Confusing Disbursements with Remuneration

Disbursements are payments the IP makes on behalf of the estate (statutory advertising, agents’ fees, search fees, sometimes specific solicitor costs). They are not part of the IP’s remuneration.

Category 1 disbursements (direct external costs with no margin) do not need separate creditor approval; Category 2 disbursements (recharges that include an internal cost element such as travel or photocopying) do.

The mistake we see is creditors lumping disbursements and remuneration together when calculating the fee burden, which produces an inflated number, undermines the objection, and makes the challenge easier for the IP to defend. Read the SIP 9 disclosure as it is written. Disbursements deserve their own scrutiny, but a different one from remuneration.

Frequently Asked Questions About IP Fees

Statement of Insolvency Practice 9, issued by R3 on behalf of the Recognised Professional Bodies, is the disclosure standard every IP must follow when seeking fee approval. It requires the IP to set out the basis, the estimated work, hourly rates by grade, and the expected fee in money terms before creditors vote. It is the transparency layer that makes informed creditor approval possible.

Fees are drawn from the asset realisations of the insolvent estate, ahead of the dividend to unsecured creditors but after fixed-charge holders are paid out of their security. They are not paid by the directors personally, except in the limited case where directors have funded the appointment with a private contribution.

Yes. The fee resolution is a vote you can amend or counter-propose. A creditor or group of creditors can table an alternative fee resolution (a different basis, a different cap, a fixed fee instead of time-cost) and ask the chair to put it to the vote. The IP cannot refuse to take the alternative resolution; the creditors decide.

SIP 9 requires the IP to disclose the overrun in the next progress report and explain why. If the original resolution was for a capped time-cost fee, the IP must seek further creditor approval before drawing above the cap. If the resolution was uncapped, the overrun is permitted but visible, and creditors can challenge the additional fees within eight weeks of the disclosure.

For a straightforward CVL with limited assets and no contentious work, fixed fees of £4,000 to £7,000 are common. Time-cost cases of similar complexity often run to £8,000 to £15,000 once all stages are done. Larger or contested cases, with antecedent transaction work, can reach £40,000 or more without anything looking unreasonable on the schedule.

A committee is requested at the decision procedure, by a creditor proposing the formation and seconding from the floor. Membership is normally three to five elected creditors. Once formed, the committee takes over fee approval, can require additional information from the IP, and meets on a schedule the committee itself sets.

Eight weeks from the date the fee determination is sent to the creditor under rule 18.34 of the Insolvency (England and Wales) Rules 2016. Each fresh fee notification carries its own eight-week window, so the right does not disappear permanently when the first window closes; it disappears for that period of fees.

Yes, where the request is reasonable. A creditor can ask the IP for further information about the fees under rule 18.9, and the IP must respond within fourteen days or apply to court if they consider the request unreasonable. Detailed time records are often the most useful disclosure for assessing whether partner-level work was being done at administrator-level cost or vice versa.

Category 1 disbursements (direct external costs paid to third parties with no internal margin) do not. Category 2 disbursements (recharges that include an internal cost allocation, such as mileage, photocopying, or shared firm overheads attributed to the file) do require separate approval and must be disclosed to creditors as such under SIP 9.

Conduct complaints go to the IP’s authorising body (the IPA, ICAEW, or another Recognised Professional Body) through the Insolvency Service’s complaints gateway. That route is separate from the rule 18.34 fee challenge, and conduct complaints can be made even after the eight-week fee challenge window has closed.

The framework is the same, but the approval body changes. In administrations with a likely return to secured or preferential creditors only, the secured (or preferential) creditors approve the fees rather than the unsecureds. In administrations where unsecureds will receive a dividend, the fee approval logic mirrors the CVL pattern.

Sometimes. Where the court finds the fees were excessive, the creditor’s costs of the application can be ordered against the estate or, in unusual cases, against the office-holder personally. The default expectation is that the costs come out of the estate, which is why coordinated challenges by larger creditor groups have a better cost-benefit profile than individual small-creditor applications.