There are no fixed costs in insolvency: the fees charged by an insolvency practitioner are influenced by the firm’s fee structure, the complexity of the case, and the value of the company’s assets.

That said, SIP 9 (the key compliance standard with which IP’s are required to comply) states any fees should be ‘fair and reasonable reflections of the work necessarily and properly undertaken.'[1]Trusted Source – GOV.UK – Statement of Insolvency Practice 9

I’ll help you understand the financial implications of engaging an insolvency practitioner in a typical insolvency scenario.


How Much Does an Insolvency Practitioner Cost?

The average hourly rate for an IP in the UK ranges from £200 to £400. However, this is just a general guideline, and the actual cost is likely to vary considerably depending on the complexity of the case, the IP’s experience, and the location of the business.

IP fees are usually split into two parts:

  1. Pre-appointment fees: These are often on a ‘fixed fee’ or ‘time cost basis’ (hourly rate multiplied by hours worked). In liquidations or voluntary arrangements, this fee is usually a fixed amount paid before the IP undertakes significant work.
  2. Post-appointment fees: These fees must be agreed upon by creditors and can be based on time spent, a fixed fee, or a percentage of assets realised and distributed. The IP decides on a fee basis, with smaller cases often using a fixed fee and larger, more complex cases using a time-spent basis.

The Insolvency Practitioners Fee Proposal

Before hiring an IP, it’s advisable to obtain a fee proposal in writing. This should clearly outline the firm’s hourly rate and any additional costs you may be responsible for.

Here are some key points to look for:

  • Hourly rate: Ensure you understand the IP’s hourly rate and any factors that could affect it, such as experience, complexity of the case, and location.
  • Disbursements: Disbursements are any out-of-pocket expenses that the IP incurs on your behalf, such as court fees, expert witness fees, and travel expenses. Make sure you understand what disbursements are included in the fee proposal and whether you will be responsible for paying them upfront.
  • Payment terms: The fee proposal should outline the IP’s payment terms, such as whether they require a deposit upfront, how often they will bill you, and what payment methods they accept.
  • Scope of work: The fee proposal should clearly define the scope of work that the IP will perform. This will help you avoid any misunderstandings about what is included in the fee and what you may be charged for additionally.
  • Contingency fees: If the IP is proposing a contingency fee arrangement, make sure you understand the terms of the agreement. This type of arrangement typically means that you will only pay the IP a fee if they successfully recover money for you. However, it is important to understand the specific terms of the agreement, such as what percentage of the recovered funds the IP will receive.
  • Termination clause: The fee proposal should include a termination clause that outlines how you can terminate the agreement with the IP. This is important in case you are unhappy with the IP’s services or if your financial situation changes.

How are Fees Decided After an Insolvency Practitioner is Appointed?

The fees of an Insolvency Practitioner (IP) are typically agreed upon between the IP and the creditors of the insolvent company.

The IP will usually provide the creditors with a fee estimate before they are appointed, and the creditors will then vote on whether to approve the fee estimate. If the creditors do not approve the fee estimate, the IP may have to apply to the court for an order approving the fees.

Insolvency Practitioners Must be Transparent over Cost

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.

What are the Standard Charges in Insolvency Proceedings?

The standard charges common across the most frequent procedures are as follows:

Before initiating any liquidation proceedings, a detailed statement of affairs must be prepared, outlining the company’s financial position.

Insolvency practitioners typically charge fees for producing this document and convening the creditors’ meeting. The statement of affairs fee is either borne by the company’s directors, the company itself, or is considered an expense of the winding-up process.

In most liquidation cases, insolvency practitioners charge for various services, including:

  • Time Spent Realising Company Assets and Distributing Proceeds: Insolvency practitioners typically charge an hourly rate or a percentage of the realized assets for the time spent identifying, liquidating, and distributing the company’s assets to creditors.
  • Compliance Work: Ensuring compliance with various legal and regulatory requirements throughout the liquidation process incurs additional fees.
  • Investigation into Directorial Conduct: Insolvency practitioners are legally mandated to investigate the conduct of company directors, which is reflected in their fees.
  • Court Fees and Disbursements: Court fees and associated expenses related to legal proceedings are also included in the insolvency practitioner’s charges.

Company voluntary arrangements (CVAs)typically involve the following insolvency practitioner fees:

  • Nominee Fee: Once the CVA arrangement is in effect, a nominee fee is deducted from monthly payments.
  • Supervisor’s Fee: An ongoing supervisor’s fee is charged for monitoring and overseeing the implementation of the CVA.

Who Pays the Insolvency Practitioners’ Fees?

Insolvency practitioner (IP) fees are typically paid from the realisation of company assets, with the remainder distributed to creditors. This means that the company’s creditors, rather than the business owners, ultimately pay the IP’s fees.

However, there are some exceptions to this rule. For example, if a company’s directors are found to have been negligent or fraudulent, they may be personally liable for the IP’s fees. Additionally, if there are insufficient company assets to cover the IP’s fees, directors might have to pay personally in the case of voluntary liquidation

How do Insolvency Practitioners Report their fees?

Insolvency practitioners (IPs) are required to report their fees to creditors in a number of ways. The specific requirements will vary depending on the type of insolvency procedure being undertaken.

  • Liquidation In liquidation, IPs are required to provide creditors with an annual report and a final report. The annual report must include a summary of the IP’s activities, including their fees. The final report must include a detailed breakdown of the IP’s fees.
  • Administration – In administration, IPs are required to provide creditors with a statement of proposals. The statement of proposals must include an estimate of the IP’s fees. IPs are also required to provide creditors with interim reports and a final report. The interim reports must include an update on the IP’s activities, including their fees. The final report must include a detailed breakdown of the IP’s fees.
  • Company Voluntary Arrangement (CVA) – In a CVA, IPs are required to provide creditors with a CVA supervisor’s report. The CVA supervisor’s report must include a summary of the IP’s activities, including their fees.

In addition to the specific reporting requirements for each type of insolvency procedure, IPs are also subject to general reporting requirements. These requirements are set out in the Insolvency Code 1996 and the Insolvency Rules 1986.

The general reporting requirements include the following:

  • IPs must provide creditors with regular updates on their activities.
  • IPs must keep accurate records of their time and expenses.
  • IPs must provide creditors with a detailed breakdown of their fees.

Failure to report fees

IPs who fail to report their fees in accordance with the requirements may be subject to disciplinary action. This action may include a fine or suspension from practice.


The primary sources for this article are listed below, including the relevant laws and Acts which provide their legal basis.

You can learn more about our standards for producing accurate, unbiased content in our editorial policy here.

  1. Trusted Source – GOV.UK – Statement of Insolvency Practice 9