1.    Fees for Preparation of Statement of Affairs and for Holding a Meeting of Creditors (Creditors’ Voluntary Liquidation)

When charging a fee for the preparation of the statement of affairs, practitioners are reminded of Rule 4.38 of the Insolvency Rules 1986 which states that any reasonable and necessary expenses of preparing the statement of affairs may be paid out of the company’s assets. The fee charged should be the actual cost (including profit costs) involved in the preparation of the statement, and should not include any element to cover other disbursements or remuneration.

As to the costs of summoning a meeting of creditors, Rule 4.62 provides that any reasonable and necessary expenses incurred may be paid out of the company’s assets. They should be charged on the actual basis, and treated separately from the cost of preparing the statement of affairs.

Both rules require that:

1. whether such payment is made before the commencement of the winding up the chairman shall inform the meeting of creditors of the amount of the payments and the identity of the person to whom it was made, and
2. such payment shall not be made by the liquidator to himself, or to any associate of his, other than with the approval of the liquidation committee, the creditors or the Court.

Under no circumstances should a fee be charged for either of these purposes as a way of augmenting any remuneration fixed in accordance with Rule 4.127.

Practitioners are reminded that where there is no liquidation committee or committee of creditors, the Secretary of State (exercising the function of the committee through the OR under Sections 141(5) or 302 of the Insolvency Act 1986) cannot fix remuneration. Rules 4.127 and 6.138 of the Insolvency Rules 1986 provide that remuneration shall be either fixed as a percentage of the value of the assets realised and/or distributed, or by reference to the time expended in dealing with the liquidation or bankruptcy. Where there is a creditors’ committee it determines the basis of the calculation, but otherwise it may be determined either by a resolution of a meeting of creditors, or on the scale laid down for the OR in Schedule 2 to the Insolvency Regulations 1994. If the practitioner considers that the remuneration fixed in accordance with the Rules is insufficient he may apply to Court for an order increasing the amount under Rules 4.130 or 6.141.

(First published in Dear IP no. 14, July 1990)

3.    Trustees Remuneration in "Old Act" Cases

In our view when a trustee is appointed by the Secretary of State to act in an ‘old Act’ case, either under paragraph 14(2) of Schedule 11 to the Insolvency Act 1986 ("the transitional provisions") or previously under Section 19 of the Bankruptcy Act 1914, his remuneration should be fixed, in accordance with Rule 337 of the Bankruptcy Rules 1952.

Paragraph 10(3) of schedule 11 provides that where subordinate legislation (in this example, the Bankruptcy Rules 1952) made under an enactment mentioned in paragraph 10(2) of the schedule (in this case the Bankruptcy Act 1914) was in force immediately before 29 December 1986, it continues to have effect on and after that date in relation to a case where a bankruptcy petition was presented, or a receiving order was made, before that date.

Accordingly, any resolution to approve remuneration obtained from a committee of inspection or a meeting of creditors is without validity, and any remuneration drawn on that basis is taken incorrectly and without authority.

Applications to fix remuneration should be addressed to Mrs Pat Christopher, IPCU, 5^th Floor West, Ladywood House, 45 - 46 Stephenson Street, Birmingham B2 4UZ, telephone 0121 - 698 4104. The application should include a full breakdown of the trustee's costs (including a detailed time cost analysis), details of the work undertaken during the period of the administration, and its benefits to the estate.

4.    Remuneration of an Office-Holder – Appropriate Authority Required

The Service’s monitoring officers and those of the RPBs are continuing to find instances of practitioners taking remuneration without the appropriate authority. Practitioners are reminded of the basis of an office-holder’s fees as set out in the Insolvency Act 1986 and the Insolvency Rules 1986.

The basis for fixing remuneration is broadly the same for liquidations and bankruptcies, i.e:

• as a percentage of the value of assets which are realised or distributed or both, or
• by reference to the time properly given by the office-holder and staff in attending to matters arising in the winding up or the bankruptcy, as the case may be.

It is for the liquidation or creditors’ committee (if there is one) to determine on which of these bases the remuneration is to be fixed, and if as a percentage to determine that level.

In arriving at that level the committee must have regard to:

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

If remuneration is not fixed as described above, then remuneration may be fixed by a resolution of a meeting of creditors. If not fixed by any of these methods, then remuneration must be in accordance with the scale laid down for the OR as set out in schedule 2 to the Insolvency Regulations 1994.

For enquiries regarding this notice please contact: Peter Armstrong, insolvency practitioners Compliance Unit, The Insolvency Service, 5^th Floor, Ladywood House, 45 Stephenson Street, Birmingham B2 4UZ (telephone 0121 698 4109).

Article Withdrawn March 2007

(First published in Dear IP no.39, October 1997)

Article Withdrawn March 2007

7.    Trustee’s Remuneration In “Old Act” Cases 

Article 3 of this Chapter provides brief details of the information required by IPCU to fix the trustee’s remuneration on behalf of the Secretary of State in respect of cases administered under the provisions of the Bankruptcy Act 1914, where the trustee was appointed by the Secretary of State.  In order to try and reduce the level of correspondence necessary between IPs and IPCU before remuneration can be fixed, replacement guidance is set out below on the information required by IPCU. 

First, as a reminder, IPs should bear in mind the words of Mr Justice Ferris in the Maxwell case, that fees of practitioners should reward value and not indemnify cost.  Accordingly, IPCU must consider if the remuneration is reasonable and appropriate, having regard to the services rendered to the estate by the trustee, rather than simply satisfying itself that the fees are not excessive.  

IPs should continue to apply for approval to IPCU, and should now provide in support of any application the following: 

1. A schedule covering the period in respect of which approval of remuneration is being sought, showing:
1. the number of hours worked by each grade of staff;
2. the hourly rate charged for that member of staff; and
3. the total cost.

2. A note to indicate the basis used in determining the rates charged, ie whether average rates have been used, actual current charge out rates, or actual charge out rates at the time the work was carried out.  IPCU would expect the IP to use the actual charge out rates at the time the work was carried out in calculating costs, and an explanation should be provided if these rates have not been used. 

3. The current charge out rates for each grade of staff, if this is not evident from the information already provided at 1 and 2 above. 

4. A note of the work undertaken by each grade of staff, as disclosed by the schedule. This should include both the general nature of the work involved, eg by reference to asset realisation(s), cashiering functions, statutory compliance duties, or case reviews, and sufficient information to enable IPCU to determine the benefits to the estate of undertaking the work, and to understand any particular difficulties and complexities in the work.

5. A general note of any unusual matters relating to the case, e.g. protracted realisations, difficulties in obtaining information and legal issues etc.

6. A note of the estimated costs of closing the case, including a note of the basis of the calculation.  Please indicate whether the estimated costs of closure are included in the claim presently submitted for approval.

7. A full statement of receipts and payments for the case, to include the dates of all transactions.

Additional information may be necessary to fix remuneration on a case by case basis, and IPs will be notified if any is required.

Enquiries arising from the above should be addressed to Jane Knight, IPCU, 5^th Floor, Ladywood House, 45/46 Stephenson Street, Birmingham, B2 4UZ.

Tel: 0121 698 4098.  email: jane.knight@insolvency.gov.uk

8. Court Practice Statement - Remuneration of Office Holders 

A new practice statement on the fixing and approval of the remuneration of appointees in insolvency proceedings came into force on 1 October 2004 and will apply to all such applications issued after that date.  A copy of the Statement is included at the end of this article.  The practice statement is the outcome of the work of a sub-committee of the Insolvency Court User’s Committee. 

The purpose of the statement is to provide guidelines as to the approach the courts take in fixing remuneration so as to ensure that applications relating to remuneration are dealt with fairly as well as flexibly. The statement also seeks to ensure that any remuneration which the courts are called on to assess is fixed on a fair and reasonable basis and by reference to value. 

Insolvency practitioners should be aware that the benefit of the doubt is decided against office holders. In assessing fees on a scale or a time cost basis the alternative method must also be disclosed as a comparator. Insolvency practitioners are also required to disclose any dialogue with creditor representatives so that their reaction is available to the court.

Any enquiries arising from this article may be directed to Devorah Burns, of IP Policy Section, Area 5.6, 21 Bloomsbury Street, London WC1B 3QW; telephone: 020 7291 6770; email: Devorah.Burns@insolvency.gov.uk  

PRACTICE STATEMENT – THE FIXING AND APPROVAL OF THE REMUNERATION OF APPOINTEES (2004)

PART ONE 

GENERAL

1. DEFINITIONS AND INTERPRETATION 

1.1       In this Practice Statement: 

            (1)            “appointee” means: 

(i) a provisional liquidator appointed under Section 135 of the Insolvency Act; 

(ii) a special manager appointed under Section 177 or Section 370 of the Insolvency Act; 

(iii) a liquidator appointed by the members of a company or partnership or by the creditors of a company or partnership or by the Secretary of State pursuant to Section 137 of the Insolvency Act, or by the court pursuant to Section 140 of the Insolvency Act;

 (iv) an administrator of a company appointed to manage the property, business and affairs of that company under the Insolvency Act or other enactment and to which the provisions of the Insolvency Act are applicable; 

(v) a trustee in bankruptcy (other than the Official Receiver) appointed under the Insolvency Act; 

(vi) a nominee or supervisor of a voluntary arrangement under Part I or Part VIII of the Insolvency Act; 

(vii) a licensed insolvency practitioner appointed by the court pursuant to Section 273 of the Insolvency Act; 

(viii) an interim receiver appointed by the court pursuant to Section 286 of the Insolvency Act; 

            (2)            “appointment” means the appointment as an appointee; 

(3)        “assessor” means a person appointed in accordance with Rule 35.15 of the CPR; 

(4)            “CPR” means the Civil Procedure Rules 1998 (as amended); 

(5)        “the court” means the court exercising jurisdiction in respect of the appointment in accordance with the Insolvency Act and the Insolvency Rules or other relevant enactment and/or applicable rules; 

(6)        “the guiding principles” means the statements of principle contained in paragraph 3.4; 

            (7)            “Insolvency Act” means the Insolvency Act 1986 (as amended); 

(8)        “Insolvency Rules” means the Insolvency Rules 1986 (as amended); 

            (9)            “the objective” means the objective stated in paragraph 3.2. 

1.2            References to paragraphs are references to paragraphs of this Practice Statement. 

2.            APPLICABILITY 

2.1       This Practice Statement shall, save to the extent and as may otherwise be ordered by the court, apply to all appointees in respect of: 

(1)        any application to the court by an appointee for the fixing and approval of his remuneration where his remuneration has not otherwise already been fixed and approved; 

(2)        any application to the court by an appointee for the fixing and approval of his remuneration in circumstances where he considers that the amount of his remuneration as fixed and approved by resolution of the members of the partnership or company or the creditors’ committee or the liquidation committee or by resolution of the general body of creditors (as appropriate) is insufficient; 

(3)        any application by a person who may be permitted to apply under the Insolvency Act, the Insolvency Rules, or otherwise including by reference to the jurisdiction of the court to supervise the conduct of one of its officers and the inherent jurisdiction of the Supreme Court and is dissatisfied with the remuneration of an appointee that has otherwise been fixed and approved on the basis that such remuneration is excessive. 

2.2       This Practice Statement shall come into effect on 1 October 2004 and shall apply to all applications for the fixing and approval of the remuneration of an appointee issued after that date.  

3.         THE OBJECTIVE AND THE GUIDING PRINCIPLES  

3.1       This Practice Statement is supplemental to the Insolvency Act, the Insolvency Rules and such other enactments or rules as have been or may be introduced and which are relevant to the fixing and approval of the remuneration of an appointee. 

3.2       The objective of this Practice Statement is to ensure that the remuneration of an appointee which is fixed and approved by the court is fair, reasonable and commensurate with the nature and extent of the work properly undertaken by the appointee in any given case and is fixed and approved by reference to a process which is consistent and predictable. 

3.3       Set out below are the guiding principles by reference to which applications for the fixing and approval of the remuneration of appointees are to be considered both by applicants, in the preparation and presentation of their application, and by the court which is required to determine such applications. 

3.4       The guiding principles are as follows: 

(1)        “Justification”: It is for the appointee who seeks to be remunerated at a particular level and/or in a particular manner to justify his claim and in order to do so the appointee should be prepared to provide full particulars of the basis for and the nature of his claim for remuneration. 

(2)        “The benefit of the doubt”: The corollary of guiding principle (1) is that on any application for the fixing and approval of the remuneration of an appointee, if after considering the evidence before it and after having regard to the guiding principles (in particular guiding principle (3)), the matters contained in paragraph 5.2 (in particular paragraph 5.2(10)) and the matters referred to in paragraph 5.3 (as appropriate) there remains any element of doubt as to the appropriateness, fairness or reasonableness of the amount sought to be fixed and approved (whether arising from a lack of particularity as to the basis for and the nature of the appointee’s claim to remuneration or otherwise) such element of doubt should be resolved by the court against the appointee. 

(3)        “Professional integrity”: The court should give weight to the fact that the appointee is a member of a regulated profession (where such is the case) and as such is subject to rules and guidance as to professional conduct and (where such is the case) the fact that the appointee is an officer of the court. 

(4)        “The value of the service rendered”: the remuneration of an appointee should reflect and should be fixed and approved so as to reward the value of the service rendered by the appointee, not simply to reimburse the appointee in respect of time expended and cost incurred. 

(5)        “Fair and reasonable”: the amount of the remuneration to be fixed and approved by the court should be fair and reasonable and represent fair and reasonable remuneration for the work properly undertaken or to be undertaken. 

(6)               “Proportionality”: 

(i)                  “proportionality of information”: in considering the nature and extent of the information which should be provided by an appointee in respect of an application for the fixing and approval of his remuneration the court, the appointee and any other parties to the application shall have regard to what is proportionate by reference to the amount of remuneration to be fixed and approved, the nature, complexity and extent of the work to be completed (where the application relates to future remuneration) or that has been completed by the appointee and the value and nature of the assets and liabilities with which the appointee will have to deal or has had to deal; 

(ii)                “proportionality of remuneration”: the amount of remuneration to be fixed and approved by the court should be proportional to the nature, complexity and extent of the work to be completed (where the application relates to future remuneration) or that has been completed by the appointee and the value and nature of the assets and/or potential assets and the liabilities and/or potential liabilities with which the appointee will have to deal or has had to deal, the nature and degree of the responsibility to which the appointee has been subject in any given case, the nature and extent of the risk (if any) assumed by the appointee and the efficiency (in respect of both time and cost) with which the appointee has completed the work undertaken; 

(7)               “Professional guidance”:  In respect of an application for the fixing and approval of the remuneration of an appointee, the appointee may have regard to the relevant and current statements of practice promulgated by any relevant regulatory and professional bodies in relation to the fixing and approval of the remuneration of an appointee.  In considering an application for the fixing or approval of the remuneration of an appointee, the court may also have regard to such statements of practice and the extent of compliance with such statements of practice by the appointee. 

(8)               “Impracticability”: where the appointee has not, either upon or shortly after the commencement of his appointment, sought to have the basis upon which his remuneration is to be fixed approved by the members of the partnership or the company, the creditors’ committee, the liquidation committee or the general body of creditors (as appropriate) and in circumstances where the appointee considers that it will be impracticable to have his remuneration fixed and/or approved in such a manner, he may, as soon as reasonably practicable after his appointment, apply to the court to have the basis upon which he is to be remunerated fixed and for directions as to the manner in which his remuneration is to be approved (which may include provision for payments to be made on account).  In circumstances where such an application may be made, to the extent that such an application is not made but the appointee subsequently makes an application to the court for the fixing and approval of the whole or any part of his remuneration, an explanation as to why no earlier application was made shall be provided to the court. 

PART TWO 

THE FIXING AND APPROVAL OF REMUNERATION 

4.            DISTRIBUTION OF BUSINESS 

4.1       All applications for the fixing and approval of the remuneration of an appointee shall in the first instance (unless otherwise ordered by the court, having regard to the particular circumstances of an application) be made, where the court is the High Court to a Registrar or a District Judge in the appropriate District Registry of the High Court or, where the court is a County Court, a District Judge in the appropriate County Court. 

4.2       On the hearing of the application the court shall consider the evidence then available to it and may either summarily determine the application or adjourn it giving such directions as it thinks appropriate.  Such directions may include a direction that: 

(1)        an assessor or a Costs Judge prepare a report to the court in respect of the remuneration which is sought to be fixed and approved; and/or 

(2)        the application be heard by the Registrar or the District Judge sitting with or without an assessor or a Costs Judge or by a Judge sitting with or without an assessor or a Costs Judge. 

4.3       In the usual course an application for the fixing and approval of the remuneration of an appointee should be determined by a Registrar or a District Judge sitting without an assessor or a Costs Judge and without the need for a report from an assessor or a Costs Judge. 

4.4       The court may give the directions referred to in paragraphs 4.2(1) and (2) where it considers this to be appropriate having regard to the size and complexity of the case or in the event that the application gives rise to complicated issues of fact or of law.  The court ought only to make an order for the involvement of a Costs Judge in circumstances where it considers the involvement of an assessor is (for whatever reason) not appropriate and that the application can only properly be determined by reference to the particular expertise and assistance that can be provided by a Costs Judge. 

4.5       A list of suitably qualified persons appointed by the court to act as assessors in respect of applications for the fixing and approval of the remuneration of an appointee is available from the court.  

4.6       The reasonable costs of an assessor appointed by the court shall be paid from the assets under the control of the appointee.

5.            RELEVANT CRITERIA AND PROCEDURE 

5.1       When considering an application for the fixing and approval of the remuneration of an appointee the court shall have regard to the objective, the guiding principles and all relevant circumstances including the matters referred to in paragraph 5.2 and where appropriate paragraph 5.3, each of which should be addressed in the evidence placed before the court. 

5.2              On any application for the fixing and approval of the remuneration of an appointee, the appointee should: 

(1)        Provide a narrative description and explanation of: 

(i)                  the background to, the relevant circumstances of and the reasons for the appointment; 

(ii)                the work undertaken or to be undertaken in respect of the appointment and in respect of which work the remuneration of the appointee is sought to be fixed and approved, which description should be divided, insofar as possible, into individual tasks or categories of task.  General descriptions of work, tasks, or categories of task should (insofar as possible) be avoided; 

(iii) the reasons why it is or was considered reasonable and/or necessary and/or beneficial for such work to be conducted, giving details of why particular tasks or categories of task were undertaken and why such tasks or categories of task are to be undertaken or have been undertaken by particular individuals and in a particular manner; 

(iv) the amount of time to be spent or that has been spent in respect of work to be completed or that has been completed and in respect of which the fixing and approval of remuneration is sought and which it is considered is fair, reasonable and proportionate; 

(v) what is likely to be and has been achieved, the benefits that are likely to and have accrued as a consequence of the work that is to be or has been completed, the manner in which the work required in respect of the appointment is progressing and what, in the opinion of the appointee, remains to be achieved. 

(2)        Provide details sufficient for the court to determine the application by reference to the criteria which is required to be taken into account by reference to the Insolvency Rules and any other applicable enactments or rules relevant to the fixing and approval of the remuneration of an appointee. 

(3)        Provide a statement of the total number of hours of work undertaken or to be undertaken in respect of which the fixing and approval of remuneration is sought, together with a breakdown of such hours by individual member of staff and individual tasks or categories of tasks to be performed or that have been performed.  Details should also be given of: 

(i) the tasks or categories of tasks to be undertaken as a proportion of the total amount of work to be undertaken in respect of which the fixing and approval of remuneration is sought and the tasks or categories of tasks that have been undertaken as a proportion of the total amount of work that has been undertaken in respect of which the fixing and approval of remuneration is sought; and 

(ii) the tasks or categories of task to be completed by individual members of staff or grade of personnel including the appointee as a proportion of the total amount of work to be completed by all members of staff including the appointee in respect of which the fixing and approval of remuneration is sought, or the tasks or categories of task that have been completed by individual members of staff or grade of personnel as a proportion of the total amount of work that has been completed by all members of staff including the appointee in respect of which the fixing and approval of remuneration is sought. 

(4)        Provide a statement of the total amount to be charged for the work to be undertaken or that has been undertaken in respect of which the fixing and approval of remuneration is sought which should include: 

(i)                  a breakdown of such amounts by individual member of staff and individual task or categories of task performed; 

(ii)                details of the time expended and the remuneration charged in respect of each individual task or category of task as a proportion (respectively) of the total time expended and the total remuneration charged. 

In respect of an application pursuant to which the amount of the appointee’s remuneration is to be fixed and approved on the basis of a percentage of the value of the assets realised and/or distributed, the appointee shall provide (for the purposes of comparison) the same details as are required by this paragraph (4), but on the basis of what would have been charged had he been seeking remuneration on the basis of the time properly spent by him and his staff. 

(5)        Provide details of each individual to be engaged or who has been engaged in work in respect of the appointment and in respect of which the fixing and approval of remuneration is sought, including details of their relevant experience, training, qualifications and the level of their seniority. 

(6)            Provide an explanation of: 

(i)                  the steps, if any, to be taken or that have been taken by the appointee to avoid duplication of effort and cost in respect of the work to be completed or that has been completed in respect of which the fixing and approval of the remuneration is sought; and 

(ii)                the steps to be taken or that have been taken to ensure that the work to be completed or that has been completed is to be or was undertaken by individuals of appropriate experience and seniority relative to the nature of the work to be or that has been undertaken. 

(7)        Provide details of the individual rates charged by the appointee and members of his staff in respect of the work to be completed or that has been completed and in respect of which the remuneration is sought to be fixed and approved.  Such details should include: 

(i) a general explanation of the policy adopted in relation to the fixing or calculation of such rates; 

(ii) in relation to charges in respect of secretarial, administrative and cashiering services (and/or such other charges as might also otherwise be regarded as an overhead cost forming a component part of the rates charged by the appointee and members of his staff), an explanation as to why (where this is the case) such costs are to be or have been charged for separately together with confirmation that where such work is to be or has been charged for separately such work will not or has not also been charged for as part of the rates that are to be or have been charged by the appointee and/or members of his staff; 

(iii)               a description of the manner in which the appointee and members of his staff record the nature of the work they will undertake or have undertaken in respect of which the fixing and approval of remuneration is sought and the manner in which the amount of time spent in carrying out such work is recorded. This explanation should include, in circumstances where time is charged for on the basis of a unit of time a description of such unit and the practice and policy applied in recording time spent by reference to that unit. 

As regards sub-paragraphs (i) to (iii) of this paragraph (7) only sub-paragraph (iii) shall apply to applications to which paragraph 5.3 applies. 

(8)        Where the application for the fixing and approval of remuneration is in respect of a period of time during which the charge out rates of the appointee and/or members of his staff engaged in work in respect of the appointment have increased, provide an explanation of the nature, extent and reason for such increase and the date when such increase took effect.  This paragraph (8) does not apply to applications to which paragraph 5.3 applies. 

(9)        Provide details of any remuneration previously fixed and approved in relation to the appointment (whether by the court or otherwise) including in particular the amounts that were previously sought to be fixed and approved and the amounts that were in fact fixed and approved and the basis upon which such amounts were fixed and approved. 

(10)      In order that the court may be able to consider the views of those persons which the appointee considers have an interest in the assets that are under his control, provide details of: 

(i) what (if any) consultation has taken place between the appointee and those persons and if no such consultation has taken place an explanation should be given as to the reason why; and 

(ii) the number and value of the interests of the persons consulted including details of the proportion (by number and by value) of the interests of such persons by reference to the entirety of those persons having an interest in the assets under the control of the appointee. 

(11)      Provide such other relevant information as the appointee considers, in the circumstances, ought to be provided to the court. 

5.3              This paragraph applies to applications where the remuneration of the appointee is to be fixed and approved on the basis of a percentage of the value of the assets realised and/or distributed.  On such applications in addition to the matters referred to in paragraph 5.2 (as applicable) the appointee shall: 

(1)        Provide a full description of the basis of and reasons for his remuneration being sought to be fixed and approved by reference to a percentage of the value of the assets realised and/or distributed. 

(2)        Provide a full explanation of the basis upon which the percentage rates to be applied to the values of the assets realised and/or distributed have been chosen. 

(3)        Provide a statement that to the best of the appointee’s belief the percentage rates which are sought to be applied are similar to the percentage rates that are applied or have been applied in respect of other appointments of a similar nature. 

(4)        By reference to the matters contained in paragraph 5.2 (as applicable), provide a comparison of the amount to be charged by reference to a percentage of the value of the assets realised and/or distributed and an estimate of the amount that would otherwise have been charged if the remuneration was to be fixed by reference to the time properly given by him and his staff. 

(5)        Provide a comparison between the amounts to be charged by reference to a percentage of the value of the assets realised and/or distributed using the percentage rates sought to be fixed and approved by the court and the percentage rates provided for by the scale of fees referred to in Schedule 6 to the Insolvency Rules. 

5.4              If and insofar as any of the matters referred to in paragraph 5.2 or 5.3 (as appropriate) are not addressed in the evidence placed before the court on the hearing of an application for the fixing and approval of the remuneration of an appointee an explanation for why this is the case should be included in such evidence. 

5.5              Notwithstanding that the expenses and disbursements of the appointee and his staff are not required to be approved by the court on any application by the appointee for the fixing and approval of his remuneration, a summary of the amount and nature of such expenses and disbursements incurred during the relevant period should be provided as should an explanation of the steps taken by the appointee to subject such expenses and disbursements to critical scrutiny. 

5.6              There should be included in the evidence placed before the court by the appointee in respect of any application for the fixing and approval of the remuneration of an appointee the following documents: 

(1)               A copy of the most recent receipts and payments account; 

(2)               Copies of any reports by the appointee to the persons having an interest in the assets under his control relevant to the period for which the remuneration sought to be fixed and approved relates; 

(3)               Schedules or such other representations of the information referred to in paragraphs 5.2 and 5.3 such as are likely to be of assistance to the court in fixing and approving the remuneration of the appointee.  

(4)               Evidence of consultation with those persons having an interest in the assets under the control of appointee in relation to the fixing and approval of the remuneration of the appointee. 

5.7       On any application for the fixing and approval of remuneration of an appointee the court may make an order permitting payments of remuneration to be made on account subject to final approval whether by the court or otherwise. 

5.8       Unless otherwise ordered by the court (or as may otherwise be provided for in any enactment or rules of procedure) the costs of and occasioned by an application for the fixing and/or approval of the remuneration of an appointee shall be paid from the assets under the control of the appointee.

9. Remuneration where there is no Resolution - Rules 4.127A and 6.138A of the Insolvency Rules 1986 (The Rules) and Statement of Insolvency Practice 9 (SIP) 

Insolvency practitioners are reminded that an office holder must ensure that fees are not drawn in accordance with the provisions of the scale set out in Schedule 6 to the Insolvency Rules 1986 (which replaced the statutory provisions relating to the Official Receiver’s scale) without first attempting to obtain the agreement of the committee or of the creditors to a basis for the fixing of remuneration. 

Any enquiries regarding the above should be directed towards Devorah Burns, Insolvency Practitioners Policy Section, Area 5.6, 21 Bloomsbury Street, London WC1B 3QW. Telephone: 020 7291 6770 email: devorah.burns@insolvency.gov.uk

10. Replacement of Court Practice Statement – ‘The fixing and approval of the remuneration of appointees (2004)’ 

Chapter 15, Article 45 issued in March 2012 announced that a revised Insolvency Practice Direction was introduced with effect from 23 February 2012. 

In addition to the matters mentioned in that article, Part V of the revised Practice Direction replaces the above court practice statement guidance on applications relating to remuneration. 

The Practice Direction sets down an overriding objective and the principles to be considered by the court, and explains in some detail the information that will be required of the office-holder or appointee in order to justify the remuneration sought. 

Part V of the Insolvency Practice Direction can be found at:

http://www.justice.gov.uk/courts/procedure-rules/civil/rules/insolvency_pd#IDAAE1JC 

This article replaces the guidance in Chapter 23 Article 8 regarding the court practice statement.  

Any enquiries regarding the Practice Direction should be directed towards Joanna Otterburn, Royal Courts of Justice, 7 Rolls Building, Fetter Lane, London EC4A 1NL. Telephone: 020 7947 7143.

Email: Joanna.Otterburn@judiciary.gsi.gov.uk  

General enquiries may be directed to IPRegulation.Section@insolvency.gov.uk