Fee changes to Insolvency Cases

The Insolvency Service is to raise fees for creditors in connection with insolvencies.

The official receiver’s case handling fee will rise to £2,775, an increase of £785 for cases where a creditor petitions for an individual’s bankruptcy.

The equivalent fee will also increase to £5,000 (up £2,480) when companies are wound up by creditors.

In cases where the government seeks to close down a company on public interest grounds, this fee will increase by £2,500.

Deposits paid by creditor's when filing petitions has also been adjusted, increasing by £165 in the case of a personal bankruptcy petition and £250 for a company petition.

However, probably the most significant change to the current fee regime will be a new general fee which replaces the Secretary of State fee. Previously this fee was calculated on a percentage (of realisations) basis throughout the life of a case up to a maximum fee of £80,000. This will now be replaced by a flat £6,000 across all types of cases. In many cases (where assets are available to the estate) creditors are likely to benefit from the prospect of increased dividends due to this capped costs. Additionally, bankrupts will also potentially see the benefit where creditors are paid in full as a greater surplus will be returned to them.

This final change appears to be a sensible approach. It always seemed a little unfair on both creditors and, in certain circumstances, the bankrupt.