• Voluntary Liquidation
• Creditors Voluntary Liquidation
• Company Liquidation
• Business Debt
• Personal Debt
• Business Bankruptcy
• Business Insolvency
• Sole Trader Insolvency
• Avoid Bankruptcy
• Company Voluntary Arrangements
• Tax Arrears
• Partnerships
• Administration
• Prepack Administration
• Prepack Finance

News

A Creditor's Guide to Administrators Fees

4 Fixing the administrator’s remuneration

4.1 The basis for fixing the administrator’s remuneration is set out in Rule 2.106 of the Insolvency Rules 1986, which states that it shall be fixed:

• as a percentage of the value of the property which the administrator has to deal with,
• by reference to the time properly given by the administrator and his staff in attending to matters arising in the administration, or
• as a set amount.

Any combination of these bases may be used to fix the remuneration, and different bases may be used for different things done by the administrator. Where the remuneration is fixed as a percentage, different percentages may be used for different things done by the administrator.

It is for the creditors’ committee (if there is one) to determine on which of these bases, or combination of bases, the remuneration is to be fixed. Where it is fixed as a percentage, it is for the committee to determine the percentage or percentages to be applied, and where it is a set amount, to determine that amount. Rule 2.106 says that in arriving at its decision the committee shall have regard to the following matters:

• the complexity (or otherwise) of the case;
• any responsibility of an exceptional kind or degree which falls on the administrator;
• the effectiveness with which the administrator appears to be carrying out, or to have carried out, his duties;
• the value and nature of the property which the administrator has to deal with.

4.3 If there is no creditors’ committee, or the committee does not make the requisite determination (and provided the circumstances described in paragraph 4.3 do not apply), the administrator’s remuneration may be fixed by a resolution of a meeting of creditors having regard to the same matters as apply in the case of the committee. If the remuneration is not fixed in any of these ways, it will be fixed by the court on application by the administrator, but the administrator may not make such an application unless he has first tried to get his remuneration fixed by the committee or creditors as described above, and in any case not later than 18 months after his appointment.

4.4 There are special rules about creditors’ resolutions in cases where the administrator has stated in his proposals that the company has insufficient property to enable a distribution to be made to unsecured creditors except out of the reserved fund which may have to be set aside out of floating charge assets.

In this case, if there is no creditors’ committee, or the committee does not make the requisite determination, the remuneration may be fixed by the approval of –

• each secured creditor of the company; or
• if the administrator has made or intends to make a distribution to preferential creditors - 
  • each secured creditor of the company; and
  • preferential creditors whose debts amount to more than 50% of the preferential debts of the company, disregarding debts of any creditor who does not respond to an invitation to give or withhold approval, having regard to the same matters as the committee would. Note that there is no requirement to hold a creditors’ meeting in such cases unless a meeting is requisitioned by creditors whose debts amount to at least 10 per cent of the total debts of the company.

4.4 A resolution of creditors may be obtained by correspondence.

1. Introduction
2. The Nature of Administration
3. The Creditors’ Committee
4. Fixing the Administrator’s Remuneration
5. Review of Remuneration
6. Approval of Pre-Administration Costs
7. What Information should be provided by the Administrator?
8. Progress Reports and Requests for Further Information
9. Provision of Information - Additional Requirements
10. What if a Creditor is Dissatisfied?
11. What if the Administrator is Dissatisfied?
12. Other Matters Relating to Remuneration
13. Effective Date

Remuneration of insolvency office holders in England and Wales.

Need Debt Advice?

Just-Debts is the one stop web site for people with debt problems. Whether you have debt problems, are currently in debt management and looking for an alternative, considering debt consolidation, or an Individual Voluntary Arrangement. Take advantage of our free consultation service.