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Creditors face fee rises when petitioning for individuals' bankruptcies 4 July 2016

The Insolvency Service is to introduce fee rises for creditors during personal and corporate insolvencies – as well as a new general fee that applies across all cases.

Credit Strategy can reveal there will be an increase in the official receiver’s administration fee by £785 when a creditor petitions for an individual’s bankruptcy.

The equivalent fee will also rise by £2,480 when companies are wound up.

This fee will also increase by £2,500 when the government seeks to close down a company on public interest grounds. The new fee structure will be announced imminently and will take effect on July 21.

But the most significant change to the current fee regime will be a new general fee which replaces the old secretary of state (SoS) fees. The new general fee will be a flat £6,000 across all types of cases.

This new fee replaces the percentage SoS fee that was charged on asset realisations in insolvent estates. It was charged throughout the life of a case up to a maximum of £80,000.

Assessing the new general fee, Paul Rouse, partner and head of national creditor services at Mazars, said: “This is an interesting introduction by the official receiver and will enable stakeholders to better estimate the costs that will be charged on insolvent estates.

“The cost of entering insolvency, or petitioning for creditors remains largely unaffected, which is good news for both the indebted seeking options and for creditors seeking enforcement against those who can pay.

“To have raised the threshold for a creditors’ petition to £5,000 and then made it prohibitively expensive to enforce, would have been unfair.”

Rouse explained that the new general fee will have an interesting impact on the bankruptcy cases that insolvency practitioners administer.

He believes that on cases with significant realisations, the winners will be the creditors, because the change allows more funds to filter back to them. These funds, Rouse added, would previously have been engulfed by the secretary of state’s percentage fee.

Rouse said: “On the flip side there are a significant number of bankruptcy cases where the secretary of state fees would have been below £6,000, allowing a small distribution to creditors.

“Although dividends are modest in these cases, the frequency is high. These type of cases will now effectively fund the official receiver and creditors will not benefit as they had done previously.”

By Marcel LeGouais



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