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A Creditor's Guide to Liquidators' Fees

4. Fixing the liquidator’s remuneration

4.1 The basis for fixing the liquidator’s remuneration is set out in Rules 4.127 – 4.127B of the Insolvency Rules 1986. The Rules state that the remuneration shall be fixed:

• as a percentage of the value of the assets which are realised or distributed or both,
• by reference to the time properly given by the liquidator and his staff in attending to matters arising in the liquidation, 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 liquidator. Where the remuneration is fixed as a percentage, different percentages may be used for different things done by the liquidator.

It is for the liquidation 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. Rule 4.127 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 liquidator in connection with the insolvency;
• the effectiveness with which the liquidator appears to be carrying out, or to have carried out, his duties;
• the value and nature of the assets which the liquidator has to deal with.

4.3 If there is no liquidation committee, or the committee does not make the requisite determination, the liquidator’s remuneration may be fixed by a resolution of a meeting of creditors. The creditors take account of the same matters as apply in the case of the committee. A resolution specifying the terms on which the liquidator is to be remunerated may be taken at the meeting which appoints the liquidator.

4.4 If the remuneration is not fixed as above, it will be fixed in one of the following ways. In a CVL, it will be fixed by the court on application by the liquidator, but the liquidator 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. In a compulsory liquidation, it will be in accordance with a scale set out in the Rules.

4.5 Where the liquidation follows directly on from an administration in which the liquidator had acted as administrator, the basis of remuneration fixed in the administration continues to apply in the liquidation (subject to paragraph 8 below).

1. Introduction
2. Liquidation Procedure
3. The Liquidation Committee
4. Fixing the Liquidator’s Remuneration
5. Review of Remuneration
6. What information should be provided by the Liquidator?
7. Progress reports and requests for further Information
8. Provision of information - additional requirements
9. What if a creditor is dissatisfied?
10. What if the liquidator is dissatisfied?
11. Other matters relating to remuneration
12. Effective date

Remuneration of insolvency office holders in England and Wales.

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