Fees, costs and disbursements in insolvency proceedings

May 2009

Part 1 Fees, costs and disbursements in insolvency proceedings

36.7 Introduction to fees and disbursements

(Amended February 2012)

This part of the chapter deals with winding-up and bankruptcy orders made by the court under Parts I to XI IA86.  Fees are payable in respect of both company and individual insolvency proceedings for tasks carried out by the official receiver or the Secretary of State and the amounts to be charged are controlled by legislation, amended by statutory instrument [Note 1][Note 2](see Annex C).  Disbursements are payments which have to be made irrespective of whether there are sufficient funds in the estate, such as local advertisements (where necessary), land registry charges and redirection of mail.

The treatment of disbursements on estate accounts differs according to the date of the insolvency order, i.e. whether the order date occurred before or after 1 April 2004.  For all insolvency orders made on or after 1 April 2004, Finance Services Team (FST) will deal with the invoices for disbursements as part of the official receiver’s administration fee (from the Vote account). See paragraph 36.16A for a full explanation of the accounting responsibilities of FST and also Estate Accounts and Insolvency Practitioner Services (EAIPS). 

 

36.8 Summary of fees to be paid under the Insolvency Proceedings (Fees) Order 2004 (FO2004)

(Amended February 2012)

A summary of the fees to be charged under the FO2004 (Schedule 2) (as amended) is given at Annex C. The application of these fees when dealing with partnership cases is set out in a table format at Annex D.

  

36.9 Case administration fees

(Amended February 2012)

The official receiver's administration fee is payable for the performance by the official receiver of his/her general duties as official receiver on the making of a bankruptcy order or a winding-up order.

FO2004 [Note 3]provides that references to the performance of the "general duties" of the official receiver on the making of a winding-up or bankruptcy order:

1. Include the payment by the official receiver of any fees, costs or disbursements except for those associated with the realisation of assets or the distribution of funds to creditors;

2. Include the official receiver’s duty to investigate and report upon the affairs of bankrupts and bodies in liquidation (although investigation costs will continue to be paid centrally); but

3. Does not include anything done by the official receiver:

(i) in connection with the appointment of agents for the purposes of, or in connection with, the realisation of assets or;

(ii) anything done in connection with or, for the purposes of, distributing assets to creditors;

(iii) the realisation of assets on behalf of the holder of a fixed and/or floating charge; or

(iv) the supervision of a special manager.

Where the full administration fee cannot be justified,  for example where an annulment application occurs early in the proceedings and only minimal administration has been carried out, the (reduced) administration fee charged should be based on the actual time as incurred by the official receiver in undertaking work applying the hourly rates set out in the Insolvency (Amendment) Regulations 2004 (see Annex E) and the case disbursements. The calculation where based on time and rate should exclude VAT. This is because there is no VAT on the administration fee and the time and rate calculation is the means used to calculate a reduced administration fee. 

 

36.10 Debt relief orders (DROs) - fees payable

(Amended February 2012)

DROs were introduced from 6 April 2009 by the Tribunals, Courts and Enforcement Act 2007, Chapter 15, Schedule 17,  which inserted Part 7A into the IA86, Sections 251A-251X.  DROs are designed to provide a non-court based scheme of debt relief for people who have a total gross property level of £300 or less, whose total liabilities do not exceed £15,000, and who have a low disposable monthly income (surplus) of £50 or less per month. For full guidance with regard to DROs and their administration please refer to Chapter 46 of the Technical Manual.  DROs do not generate an “estate”, however fees are charged to cover administrative costs.  All DRO applications are entered into an automated computer system by approved intermediaries such as the Citizen’s Advice Bureau. A successful application for a DRO requires the individual concerned to pay a fixed, non-refundable £90 fee (fee DR01), which is both an administration fee for the performance by the official receiver of his/her functions and payment of the costs (to a maximum of £10) of the intermediary [Note 4].  The fee must be received by The Insolvency Service Finance Section within 10 days of the submission of the DRO application by an intermediary, otherwise the application is automatically rejected.  All DROs are administered by the DRO Unit, currently based at the Insolvency Service’s Plymouth office.  

 

36.11 Official Receiver’s administration fees W1 and B1

(Amended November 2014)

The official receiver's administration fees are flat, fixed rate fees.  Under the FO2004 all insolvency orders made on or after 1 April 2004 are subject to these administration fees. There is one administration fee for compulsory company cases (fee W1, £2,400) and one for bankruptcy cases (fee B1, £1,850) to be charged on the making of the winding-up order and bankruptcy order respectively. These cover the stationery and other incidental fees that used to be separately charged under the old financial regime, as well as all common official receiver disbursements such as travel and subsistence, the Gazette and advertising costs. Following the implementation of the Insolvency Proceedings (Fees) (Amendment) Order 2007 the administration fees were extended to include costs associated with the duty of the official receiver to investigate and report upon the affairs of companies in liquidation and bankrupts. 

 

36.12 Official receiver’s (non asset recovery) actions covered by the administration fee

(Amended February 2011)

The general principle is that if work should be done by the official receiver which relates to the official receiver's duties, then it should be covered by the administration fee,  regardless of whether the official receiver does it directly him/herself or if he/she instructs someone else to carry out the work on his/her behalf.  An example of this is where the official receiver requests a professional medical report on a director or bankrupt, as part of the official receiver’s usual statutory duties. It follows that if there are any expenses incurred by the official receiver in undertaking the work covered by the administration fee, such as the cost of a process server’s expenses in connection with a public examination, they should not be charged to the insolvency estate but should be paid from the Vote account. 

 

36.13 Costs incurred in realising assets (insolvency practitioner costs)

(Amended February 2012)

Costs incurred by the official receiver as trustee or liquidator in respect of the protection and realisation of assets are charged to the estate as disbursements. This does not include any time and rate costs which are not charged in practice, following Insolvency Service policy. Insolvency practitioners in practice should only incur costs in connection with the realisation or distribution of assets. Their costs should be charged to the estate as they are not covered by the administration fee which is payable to the official receiver. In this way, the costs of administering the assets in an insolvency estate, whether that work is undertaken by an official receiver or an insolvency practitioner, have the same basis. EAIPS deals with the estate accounts where costs are incurred in realising assets for the estate (see paragraph 36.16A).

 

36.14 Distribution costs

(Amended May 2010)

The administration fee excludes the function of realising and distributing assets to creditors (see paragraph 36.9 and [Note 3]). Since 1 April 2004 distribution costs on all cases, i.e. for cases where the winding-up order or bankruptcy order is pre or post 1 April 2004, have been charged using the time and rate calculation.  For further information go to paragraph 36.43 and Chapter 36A Part 1.  

36.15 Disbursements (general) where insolvency order pre 1 April 2004

For cases where the winding-up order or bankruptcy order was made before 1 April 2004, all disbursements should be charged to the individual estates. These disbursements must be sent EAIPS for payment.  

 

36.16 Disbursements (general) where insolvency order made on or after 1 April

(Amended February 2012)

For cases where the winding-up order or bankruptcy order is made on or after 1 April 2004, the majority of disbursements are included in the administration fee and therefore should not be charged to the estate but paid for from Vote. These disbursements must be sent to Finance Services Team (FST) for payment. If the disbursement relates to the realisation of assets or the distribution of funds to creditors, it is not covered by the administration fee and thus should be charged to the individual estate in all cases. These disbursements should be sent to EAIPS for payment.  

36.16A Accounting remit of EAIPS and FST (amended May 2015)

(a) Estate Accounts and Insolvency Practitioner Services (EAIPS)
 

With effect from 1 October 2011, Estate Accounts Services (EAS) merged with the Insolvency Practitioner Unit to form a new directorate called Estate Accounts and Insolvency Practitioner Services (EAIPS).  EAIPS is responsible for handling all receipts into and payments out of the Insolvency Services Account (ISA).   EAIPS maintains an account for each insolvency estate and ensures that fees are charged and collected for insolvency estates in accordance with the legislation.  In maintaining the accounts, EAIPS provides services in relation to them, including amongst other things,  the handling of unclaimed dividends and the crediting of interest. 

(b) EAIPS email contacts 

Following the merger, EAIPS  team e-mail addresses have been created to provide contact details as follows: 

EAIPS.Annulments: Annulment cases only; for requests (completed forms) to rebate amount of administration fee, charge time and rate, and financial closure.

EAIPS.OR.Transfer: For requests to charge the time and rate fee (not annulments), transfers (amount of balance, receipt or payment) or to rebate fees.

EAIPS.P&D@insolvency.gsi.gov.uk: For all enquires relating to petitions and deposits processed by EAIPS.

EAIPS.EA.Enquiries: For all estate accounting enquiries.

EAIPS.Receipts.Team: For all receipt enquiries (excluding general suspense receipts - see below).

EAIPS.Payments.Team: For all payment enquiries and email notifications of remittances and payment/invoice requests put in the post to EAIPS.

EAIPS.Suspense: For all enquiries relating to receipts in general suspense (both BACS and cheque remittances).

EAIPS.Unclaimed: For all enquiries relating to unclaimed monies.

EAIPS.IP.enquiries: For general enquiries concerning Insolvency Practitioners, Secretary of State sanctions and Insolvency Practitioner appointments. 

(c) Finance Services Team (FST) 

FST is part of the Finance, Governance and Accounting Services Directorate which also incorporates Accounting Services and Corporate Governance.   The FST handles The Service’s back office accounting functions.  This includes managing electronic payment systems, making payments and handling receipts for all claims approved by Redundancy Payments Services (RPS) and for Debt Relief Orders,  and generally handling all receipts and payments, other than those received into and paid from Estate Accounts,  which are dealt with by EAIPS (see (a) above). 

(d) FST telephone and email contacts 

The FST helpdesk can be contacted on 0121 335 4529 or via the following email addresses:

Finance.Planning  - VOTE Payments (official receiver case disbursements) and Reward Vouchers.

Finance.Support - Beeline, Government Procurement Cards (GPC), KDS and Trainline.

Finance.Birmingham - RP Payments.

 

36.17 Treatment of disbursements - pre and post 1 April 2004

(Amended February 2012)

The following table summarises the treatment of disbursements in official receiver’s insolvency cases pre 1 April 2004 and post 1 April 2004:

Description of disbursement

Relevant date

Official receiver's administration fee applicable

Charge to estate

Send invoice to EAIPS or FST for payment

Comments

Advertisement

 

Date of invoice up to and including 31 March 2004

No

Yes

EAIPS

 

Advertisement

(for everything except a distribution)

Date of invoice on or after 1 April 2004 and petition presented before 6 April 2009

Yes

No

FST

No invoices should be received by the official receiver due to the consolidated invoice agreement with The Insolvency Service’s agents (see paragraphs 36.18 to 36.19).

Advertisement

(for everything except a distribution)

Petition presented on or after 6 April 2009, Insolvency (Amendment) Rules 2009 (IAR 2009) apply. Advertising in addition to Gazette is discretionary.

If additional advertisement is deemed necessary,  cost is covered by the administration fee, see also Case Help Manual part “Publication of Insolvency Information” part 2, paragraphs 12 to 25

 

No

FST

The IAR2009 came into force on 6 April 2009.  The revised Rules require mandatory publication of key insolvency events in the London Gazette.  Any further advertising, in addition to the Gazette, to be at the discretion of the official receiver as office holder (see paragraph 36.20)

Advertisement for distributions

Date of invoice on or after 1 April 2004

No

Yes

EAIPS

FST will have paid the consolidated invoice (see above) but EAIPS will need to reimburse Vote for distribution advertise-ments (see paragraph 36.23).

Gazette Notice (other than provisional liquidations and dividends)

Petition presented on or after 6 April 2009

Yes

No

FST (ORBS)

Payment of the invoices relating to these Gazette notices is dealt with centrally by Official Receivers’ Business Services (see paragraph 36.22). 

 

Gazette Notice (provisional liquidations and dividends)

Petition presented on or after 6 April 2009

No

Yes

FST  Public Interest Unit (PIU) or National Dividends Unit (NDU)

Invoiced payments relating to the Gazette notice for provisional liquidations and dividends are dealt with separately by PIU and NDU respectively. The costs of these notices are not included in administration fee (see paragraph 36.22).

Court fees

Insolvency order date pre 1 April 2004

No

Yes

EAIPS

(See paragraphs 36.24 to 36.26).

Court fees - relating to the official receiver's general duties

Insolvency order date on or after 1 April 2004

Yes

No

FST

(See paragraphs 36.24 to 36.26)

Court fees - relating to the realisation of assets

Insolvency order date on or after 1 April 2004

No

Yes

 

EAIPS

(See paragraphs 36.24 to 36.26)

Land Registry

Statement as at 31 March 2004

No

Yes

EAIPS

(See paragraph 36.27)

Land Registry

Statement as at 30 April 2004 and thereafter

Yes

No

FST

(See paragraph 36.27)

Land Registry - Form J restrictions  

 

Pre and post 1 April 2004

No

Yes

EAIPS

(See paragraph 36.27)

Redirection of mail

Insolvency order date pre 1 April 2004

No

Yes

EAIPS

 (See paragraph 36.28

Redirection of mail

Insolvency order date on or after 1 April 2004

Yes

No

FST

Paid centrally.
(See paragraph 36.28)

Travel and subsistence

Insolvency order date pre 1 April 2004

No

Yes

EAIPS

(See paragraph 36.29)

Travel and subsistence (non asset related)

Insolvency order date on or after 1 April 2004

Yes

No

FST

(See paragraph 36.29)

Travel and subsistence (asset related)

Insolvency order date on or after 1 April 2004

No

Yes

EAIPS

(See paragraph 36.29)

Cost of collecting books and other accounting records

Insolvency order date pre 1 April 2004

No

Yes

EAIPS

(See paragraph 36.30)

Cost of collecting books and other accounting records

Insolvency order date on or after 1 April 2004

Yes

No

FST

(See paragraph 36.30)

Experian searches to locate directors and bankrupts and access financial data

Insolvency order date pre and post 1 April 2004

Yes

No

FST

A consolidated invoice is sent to FST (see paragraph 36.31)

Insurance

Insolvency order date pre and post 1 April 2004

No

Yes

 EAIPS

These costs are associated with the realisation of assets, therefore they are not covered by the administration fee (see paragraph 36.32)

 

36.18 Service Level Agreement (SLA) for advertising (non-Gazette)

(Amended February 2012)

The Insolvency Service has a SLA with Tribal, as its agent responsible for dealing with the issue of all statutory advertising carried out by the official receiver (except London Gazette notices),  for publication where newspaper advertising is required.

Tribal raises invoices for the adverts placed, only after it has received proof of publication of the advertisement, which will generally be within 21 days of publication. 

Invoices are sent on a weekly basis by the agent, directly to Official Receivers’ Business Support (ORBS) and to the National Dividends Unit (NDU).  Payment of these invoices is dealt with by direct payment, administered by ORBS.  Confirmation of all advertisements will be sent to official receivers either by telephone or email.  There is no longer a requirement to retain a “certificate of publication” on the office file or to file a copy at court.

For full details on placing an advertisement using Tribal (including contact details) and all other related advertising matters, refer to Chapter 5, particularly paragraphs 5.17 to 5.21 and also the Case Help Manual Part Publication of insolvency information.

See paragraphs 36.19 - 36.22 for details of the Rule changes concerning advertisements on cases where the petition was presented on or after 6 April 2009.

 

36.19 Advertising where the petition was presented before 6 April 2009

In cases where the petition was presented before 6 April 2009 the requirement to advertise and the procedure for advertising remains as it was before this date. The cost of advertisements in cases where the insolvency order was made on or after 1 April 2004 is covered by the administration fee except for advertisements relating to distributions.

 

36.20 Advertising where petition presented post 6 April 2009

The Insolvency (Amendment) Rules 2009 (the 2009 Rules) came into force on 6 April 2009.  These revised Rules continue to require mandatory publication in The London Gazette of key insolvency events, with any further advertising, (that is in addition to the notice in the Gazette) to be at the discretion of the official receiver as office holder.  There is no requirement that this further advertising must be by newspaper.

The 2009 Rules apply to cases where the petition was presented on or after 6 April 2009. For cases where the petition was presented before 6 April 2009, the Insolvency Rules previously in force will continue to apply.

In cases where the petition is presented on or after 6 April 2009, and the official receiver exercises his/her discretion to advertise in a newspaper, agents will continue to be used.  The cost of an advertisement in these circumstances is covered by the administration fee except for advertisements relating to distributions.

See Chapter 5 for full details concerning the implications of the introduction of the 2009 Rules.

 

36.21 Annulment advertisement

(Amended February 2012)

Following the making of an annulment order, the former bankrupt may request (within 28 days of the making of the annulment order) that the making of the annulment order is published in the Gazette, and also advertised in the same manner as the bankruptcy order may otherwise have been advertised originally. Where the request to advertise an annulment is made within 28 days of the annulment, the official receiver is required to publish the Gazette notice, and the cost of this is deemed to be covered by the administration fee.

See also the Technical Manual Chapter 5 and the Case Help Manual part Annulments, Rescissions and Recalls.

 

36.22 Gazette Notices post 6 April 2009

Payment of the invoices relating to new Gazette notices required as a result of the implementation of the 2009 Rules will be dealt with centrally, with Official Receivers’ Business Services dealing with the audit and payment.  The exceptions to this are the payment of Gazette notices relating to provisional liquidations and dividends, which will be dealt with separately by Public Interest Units and the National Dividends Units respectively, as the costs of these notices are not part of the administration fee.

 

 

36.23 Advertisement of dividends

(Amended February 2012)

The 2009 Rules which introduced discretionary advertising, in addition to the notice in the Gazette (see paragraph 36.20), apply to cases where the petition was presented on or after 6 April 2009. For cases where the petition was presented before 6 April 2009 the Insolvency Rules previously in force will continue to apply.

Advertisements for dividends (as they relate to distributions) are not covered by the administration fee and where required need to be charged to the estate. This will also include advertisements of returns of capital to contributories in companies. See Chapter 36A paragraph 36A.13 for further information concerning distribution activity costs.  Following approval for payment,  the National Dividends Unit (NDU) will forward the charge details for distribution advertisements to EAIPS to enable them to arrange for payment from the estate.

 

 

36.24 Court fees 

(Amended May 2011)

The official receiver may be required to pay certain court fees. These are currently governed by the Civil Proceedings (Fees) Order 2008 (SI 2008/1053) [Note 5], which came into force from 1 May 2008, and the Civil Proceedings Fees (Amendment) Order 2008 (SI 2008/2853) which came into force from 26 November 2008.  Exemptions apply for certain fees where the official receiver is acting only in that capacity and not as liquidator of the company or trustee of the bankruptcy estate (see also paragraph 36.25)

Amendment of this order is completed by statutory instrument. Details of updated fees are usually provided in a Technical news item or Finance news item.

 

36.25 Court fees payable by the official receiver

(Amended May 2011)

No fee is payable on a request or on an application to the court (county court or High Court) by the official receiver, when applying only in the capacity of official receiver to the case (and not as liquidator or trustee) [Note 5]. Fees which the official receiver may have to pay are as follows:

  • Fee 3.11 (£35) - on an application by consent or without notice within existing  proceedings,  where no other fee is specified.
  • Fee 3.12 (£70) - on an application with notice within existing proceedings where no other fee is specified.
  • Fee 8.4(b) (£100) - on an application for a charging order.

Note: All fee amounts above reflect increased fees brought into force on 4 April 2011 by the amendments made to the Civil Proceedings (Fees) Order 2008 (SI 2008/1053) [Note 5] by the Civil Proceedings Fees (Amendment) Order 2011 (SI 2011/586).

 

36.26 Applications where court fees may be payable by the official receiver (amended May 2015) 

Examples of applications where the official receiver may have to pay court fees are: 

  1. Applications under rule 7.20 IR86 for orders enforcing compliance with the Rules. Under section 235 IA86 applications can be made by the official receiver; the administrator, the administrative receiver, the liquidator or the provisional liquidator. If the application is made only as official receiver then in theory no fee is payable. In practice official receivers have been required by the court to pay the fee on these applications.
  2. Applications under section 310 IA86 for income payments orders (including variations or discharge of IPO). Applications can only be made by the trustee.
  3. Applications under section 236 and 366 IA86 for private examinations; applications can be made by the official receiver, the liquidator or the trustee. Official receivers are advised to apply as official receiver and no fee is payable. Refer to Chapter 23 for full information on applying for a private examination.  

The administration fee covers applications that relate to the performance by the official receiver of his general duties as official receiver on the making of a bankruptcy order or a winding-up order (e.g. a rule 7.20 IR86 application). The official receiver should requisition a cheque from FST.  In the majority of applications in this category no fee will arise as the official receiver is exempt from fees when applying in his/her capacity as official receiver.  

The administration fee will not cover applications that are associated with the realisation of assets, where the official receiver is likely to be making application as liquidator or trustee (e.g. an IPO application). In these circumstances, the official receiver should requisition a cheque from EAIPS against a specific estate account. 

 

36.27  Land Registry charges

(Amended July 2013)

HM Land Registry fees are paid by the Service through a variable direct debit.  The fees will be added to the variable direct debit (VDD) automatically where the Land Registry Portal is used but where a paper based application is made (for example an RX1) the option to pay through a “direct debit, under an agreement with Land Registry” should be selected.  It is important that the Service’s key number is entered correctly on the form.  The key number can be found in the template RX1, see HERE.

The cost of obtaining a title plan or copy of the title register through the Land Registry Portal is currently £3. The cost of lodging a Form J restriction (using Form RX1) is currently £40 regardless of whether submitted on paper or electronically through the Portal using e-DRS (see part 8 for further information).  As the lodging of a Form J restriction is related to the realisation of assets the cost of obtaining the restriction is not covered by the administration fee and should therefore be charged against the estate. EAIPS will check the invoices from the Land Registry and arrange for them to be paid.  It is very important that staff use a reference that refers to the office making the application and the particular case to which the application relates in the format “BKT Number-Office ” e.g. BKT00000001-LTADT.  If the Form being used forms part of a joint application the reference should be prefixed with the letters “JNT”. 

All paper Land Registry applications created by an office that cannot be submitted electronically through the Portal should be sent together as a single batch to-

Land Registry Bankruptcy Unit

Plymouth Office

Seaton Court

2 William Prance Road

Plymouth

PL6 5WS

There is no need for a covering letter.

When assigning the payments EAIPS will charge general searches to the administration fee and Form J restrictions to the estate. If you complete a transaction that needs to be allocated in an alternative manner, please contact EAIPS.EA.Enquiries

 

36.28 Re-direction of mail

(Amended February 2012)

The re-direction of mail is included in the official receiver’s administration fee. The costs of any re-direction order are paid centrally by FST against an invoice submitted by Royal Mail. In the unlikely event that a re-direction of mail is required in a pre 1 April 2004 case,  the expense should be identified to FST as a cost to be charged against the estate,  to enable the necessary adjustment to be made with EAIPS.

 

36.29 Travel and subsistence

A travel and subsistence claim in connection with further investigation work undertaken after 1 April 2004 should be sent to FST for payment. The payment will be allocated to an enforcement ledger heading.

 

36.30 Apportioning costs where agents recover assets and accounting records on behalf of the official receiver

(Amended February 2012)

Where an agent is employed by the official receiver to recover assets,  he/she will usually account to the official receiver for the proceeds of the assets he/she has recovered net of his/her fees and expenses, as a direct cost to the estate account (see Chapter 32 , paragraph 32.1.12.). 

Where the official receiver has instructed his/her agent to recover accounting books and records (see Chapter 10 paragraph 10.20),  the cost of this activity is covered under the official receiver’s administration fee (see paragraph 36.9 point (1)).  The agent’s invoice for this activity should be copied to FST, who will arrange for the agent’s costs and expenses to be paid from VOTE (official receiver case disbursements).

Where the agent has been instructed to recover both assets and records on behalf of the official receiver, he/she should be asked to identify in his/her invoice which costs relate to which activity, to enable the official receiver to apportion the expenses accordingly and advise FST if a VOTE payment is required. 

 

36.31 Experian charges

(Amended April 2012)

Experian raises a consolidated invoice which is paid centrally by ORBS. It is not allocated against the estates. Use of Experian services are monitored and audited by ORBS.  To enable ORBS to carry out the appropriate auditing of Experian usage, official receivers should ensure that where any user of Experian leaves or moves to a different office or section, ORBS is notified of this.  Official receivers should also make sure that for each search made, the correct case reference is included,  so that ORBS can trace the case when carrying out an audit.

 

36.32 Insurance costs

(Amended February 2012)

As insurance costs are associated with the protection or realisation of assets, the administration fee does not cover them. The payment instruction should be sent to EAIPS and charged to a specific estate account. This is applicable to insolvency orders made pre and post 1 April 2004.  

 

36.33  Public Interest Unit (PIU) cases - pre 1 April 2004

Where an order appointing a provisional liquidator/interim receiver or a winding-up order/bankruptcy order is before 1 April 2004, all disbursements on PIU cases must be charged to the individual estate. The payment should be sent to EAIPS.  

 

36.34 Public Interest Unit (PIU) cases - post 1 April 2004

Where an order appointing a provisional liquidator/interim receiver has been made, any disbursements up to the date of the winding-up order or bankruptcy order are charged to the estate. Where the winding-up order or bankruptcy order was made on or after 1 April 2004, the decision on whether further disbursements on a PIU case should be charged to the estate will be determined on exactly the same basis as any other insolvency case which the official receiver administers.

If the invoice relates to items that are covered by the administration fee, it should be authorised by the official receiver and passed to FST for payment. If the invoice relates to the official receiver dealing with assets, it should be authorised by the official receiver and passed to EAIPS for payment, and will be charged to the estate.

 

36.35 Cost centres and codes

Where these instructions specify that you should send the payment to FST, the official receiver's office should use their own cost centre and the following account codes:

Code H3100 - official receiver case disbursements (except travel & subsistence),

Code G1600 - travel and subsistence official receiver case disbursements.

Payments will be made by EAIPS or FST. If an official receiver sends the payment to EAIPS by mistake, EAIPS staff will, where possible, redirect the instruction to FST and notify the official receiver by email of the error. Finance Section will try to do the same, provided that the date of the order is clearly visible from the documentation. Official receivers must ensure that when they authorise the invoice for payment they record the date of the bankruptcy or winding-up order next to the authorisation stamp.  

 

36.36 Abolition of Secretary of State fee - insolvency order pre 1 April 2004

(Amended February 2012)

The Insolvency Fees Order 1986 was revoked in its entirety on 1 April 2007, by the implementation of the Insolvency Proceedings (Fees) (Amendment) Order 2007.  This means that the fees required to be paid in respect of old cases (cases commenced under Insolvency Act 1986 after 29 December 1986  where the insolvency order was made before 1 April 2004) for the performance by the Secretary of State of his general duties, fixed by reference to a percentage of an amount paid in to the Insolvency Services Account (ISA) by trustees, liquidators or the official receiver, have been abolished. In these cases the authority under Article 4(2) of the Insolvency Fees Order 1986 has been revoked, which means there is no Secretary of State fee payable on funds paid in to the ISA on or after 1 April 2007 for these cases. This does not affect such fees validly charged before this date. 

  

36.37 Abolition of realisation fee when acting  as receiver and manager - insolvency order pre 1 April 2004

(Amended February 2012)

The requirement for the official receiver to charge a realisation fee when acting as the receiver and manager of a bankruptcy estate in cases where the insolvency order was made before 1 April 2004,   was removed as a result of the implementation of the Insolvency Proceedings (Fees) (Amendment) Order 2007.  This also applies  where funds are paid in to the ISA for these cases after 1 April 2007. This does not affect such fees validly charged before this date.   

 

36.38 Secretary of State Fee (Fees W2 and B2) - Insolvency order date on or after 1 April 2004 but before 6 April 2010

(Amended February 2012)

For all insolvency cases for the performance of general duties under the insolvency legislation in relation to the administration of the estate of each company or bankruptcy by the Secretary of State, there is a fee payable,  currently limited to a maximum of £80,000 [Note 4]. This is calculated as a percentage of total chargeable receipts relating to the company or bankruptcy (fee W2 and B2).

For both company and bankruptcy cases where the insolvency order date is after 1 April 2004 but before 6 April 2010, the first  £2,000 of chargeable receipts is not subject to the Secretary of State fee (0% applies) and the rate to be charged for chargeable receipts above this amount is 17%. See worked example at paragraph 36.38A.

 

36.38A Chargeable receipts worked example (where the insolvency order date is on or after 1 April 2004 but before 6 April 2010)

(Inserted February 2012)

'Chargeable receipts' are described by the FO2004 as those sums which are paid into the Insolvency Services Account (ISA) after first deducting any realisations paid into the ISA which are subsequently paid out to secured creditors in respect of their securities (i.e. the proceeds of charged assets realised on behalf of the secured creditor),  or amounts used in carrying on the business of the company or the bankrupt [Note 6].

Example calculation of fee W2 - insolvency order date on or after 1 April 2004 but before 6 April 2010:

Description

Amount
(£)

 Balance
(£)

 

Proceeds realised from sale of property interest (paid in to ISA)

15,000

 

 

(less monies paid to creditor holding secured charge)

(2,000)

13,000

 

(less wages paid to employee to maintain shop premises whilst business continued)

(5,000)

8,000

 

(less first £2,000 against which the Secretary of State fee is not chargeable)

(2,000)

6,000

 

 

 

 

Secretary of State Fee payable (£)

Secretary of State Fee payable against balance b/d (£6,000)

 

 

£6,000 x 17%

£1,020

 

36.38B Secretary of State Fee (Fees W2 and B2) – where the insolvency order date is on or after 6 April 2010

(Inserted February 2012)

In cases where the insolvency order date is on or after 6 April 2010, the Secretary of State fee for the administration of the estate is also payable as for pre 6 April 2010 cases (see paragraphs 36.38 and 36.38A),  but it is calculated at different rates as a percentage of total chargeable receipts, depending on the amount of those chargeable receipts, as follows:

(a) Company cases (Fee W2)

  • First £2,500 of chargeable receipts - not subject to the Secretary of State fee (0% fee applies).
  • Next  £1,700 of chargeable receipts - 100% fee applies.
  • Next  £1,500 of chargeable receipts – 75% fee applies.
  • Next  £396,000 of chargeable receipts – 15% fee applies.
  • Remaining amount of chargeable receipts  - 1% fee applies (to a maximum total fee of £80,000).

(b) Bankruptcy cases (Fee B2)

  • First £2,000 of chargeable receipts - not subject to the Secretary of State fee (0% fee applies).
  • Next  £1,700 of chargeable receipts - 100% fee applies.
  • Next  £1,500 of chargeable receipts  - 75% fee applies.
  • Next  £396,000 of chargeable receipts – 15% fee applies.
  • Remaining amount of chargeable receipts  - 1% fee applies (to a maximum total fee of £80,000).

See worked example at paragraph 36.39.

 

36.39 Chargeable receipts worked example (where the insolvency order date is on or after 6 April 2010)

(Inserted February 2012)

'Chargeable receipts' are described as those sums which are paid into the Insolvency Services Account (ISA) after first deducting any realisations paid into the ISA which are subsequently paid out to secured creditors in respect of their securities (i.e. the proceeds of charged assets realised on behalf of the secured creditor),  or amounts used in carrying on the business of the company or the bankrupt [Note 6].

Example calculation of fee W2 (company) - insolvency order date on or after 6 April 2010:

Description

Amount
(£)

Balance
(£)

 

Proceeds realised from sale of property interest (paid in to ISA)

15,000

 

 

(less monies paid to creditor holding secured charge)

(2,000)

13,000

 

(less wages paid to employee to maintain shop premises whilst business continued)

(5,000)

8,000

 

(less first £2,500 against which the Secretary of State fee is not chargeable)

(2,500)

5,500

 

 

 

 

 

Fee to be paid

Balance c/d against which Secretary of State fee is payable (£)

Remaining balance against which to charge the Secretary of State fee (£)

Secretary of State Fee payable (£)

100% x £1,700

5,500 

3,800

1,700   

75% x £1,500

 

2,300

1,125

15% x £2,300

 

Nil

345

 

 

Total Secretary of State fee to be charged

=

£3,170

 

36.40 Bankruptcy ceiling  

(Amended February 2012)

In addition to the percentage and maximum amount restrictions on charging the Secretary of State fee,  as detailed in paragraphs 36.38, 36.38A, 36.38B and 36.39,  in bankruptcy estates only no Secretary of State fee is charged on that part of the total receipts which exceeds the bankruptcy ceiling. The FO2004 [Note 6] describes the bankruptcy ceiling as the sum arrived at by adding together:

  1. the bankruptcy debts required to be paid under the Rules;
  2. any interest payable by virtue of section 328(4)[Note 7]; and
  3. the expenses of the bankruptcy as set out in Rule 6.224)[Note 8] other than;
  4. any sums spent out of money received in carrying on the business of the bankrupt; and
  5. fee B2 (see paragraphs 36.38 and 36.38B)

Existing fees charged properly should remain as charged.

Where known creditors have not proved their debts and therefore it is not possible to pay all debts listed in the bankruptcy, there is authority in the case of Re Ward, Ex parte Hammond and Son v The Official Receiver and the Debtor [1942] Ch 294) [Note 9] to the effect that for the purposes of section 330(5), creditors means creditors who have proved in the bankruptcy.  Where creditors remain unproved and the trustee is calculating the bankruptcy ceiling, the case of Re Ward provides the authority for the trustee to include only the proved creditors and the statutory interest paid to them as the bankruptcy debts required to be paid under the Rules.

 

36.41 Investment Fee INV1

Each request made by a trustee in bankruptcy or a liquidator in a compulsory or a voluntary winding up for the sale or purchase of any government securities must be accompanied by the appropriate amount of fee INV1.  This varies depending on whether the amount of the purchase or sale of the securities (including accrued interest) is less than £5,000 (when the fee is £50) or exceeds £5,000 (when the fee is £50 plus 0.3% of the cost or proceeds exceeding £5,000)(see Annex C) [Note 4].

 

36.42 VAT payable on fees

Where VAT is chargeable in respect of a service for which a fee is prescribed by virtue of the provisions of the FO2004, VAT is payable in addition to that fee, e.g. VAT is chargeable on the time and rate fee charged when making a distribution to creditors. The VAT must be charged regardless of whether the estate is registered for VAT [Note 10].  No VAT is charged on the administration fee or where time and rate is used to calculate the reduced administration fee, see paragraph 36.9.

 

36.43 Official receiver's remuneration (Time and Rate Fee)

(Amended February 2012)

Regulation 35 of the IRegs 1994 (as amended) [Note 11] provides that the official receiver is entitled to remuneration calculated in accordance with the applicable hourly rate for services provided by him/her in relation to:

a) a distribution made by him/her when acting as liquidator or trustee to creditors (including preferential or secured creditors or both such classes of creditors);

b) the realisation of assets on behalf of the holder or a fixed or floating charge or both types of those charges;

c) the supervision of a special manager;

d) the performance by him/her of any functions where he/she acts as provisional liquidator; or

e) the performance by him/her of any functions where he/she acts as an interim receiver.

In other words, where the official receiver makes a distribution or performs a task for which there is no fee applicable, he/she should charge the time and rate fee for his/her remuneration. The time spent in carrying out the duty should be recorded and the fee is based on an hourly rate depending on the number of creditors and the expected time spent by each grade, using the appropriate tables as detailed at Chapter 36A Part 1 and Chapter 36A Annex C. There are separate tables for calculating the remuneration of the official receiver in London (table 2) and the remuneration of the official receiver of any other district (table 3) [Note 12].

 

36.44 Costs of convening a requisitioned meeting of creditors

Creditors have the power to requisition a meeting of creditors for the purpose of appointing a liquidator or trustee in a case where the official receiver has not yet summoned, or has decided not to summon, a meeting [Note 13][Note 14]. The rules provide that the requisitioning creditor is responsible for paying the expenses of summoning and holding such a meeting and he/she must deposit funds with the official receiver to cover those expenses. Further, the rules state that the official receiver should take no action regarding summoning the meeting without such a deposit having been made [Note 15][Note 16]. See also paragraph 36.45 for information concerning payment of these expenses.

 

36.45 Payment of advertising costs of requisitioned meeting

Following the introduction of the case administration fee (fee W1 and B1), and the repeal of the prescribed meetings fee in the FO2004,  the requisitioning creditor is not required to pay a meetings fee. Where the official receiver fixes a meeting following its requisition by a creditor, the requisitioning creditor should still be charged for any advertisement [Note 15][Note 16].  Once the advertising charge is received from the requisitioning creditor, it should be deposited in the estate account.

The Insolvency Service’s agent Tribal will raise an invoice for the cost of any advert placed in order to call a requisitioned meeting, and will send its invoice to ORBS or NDU as appropriate (see paragraph 36.18).

Should the official receiver have to hire a room for the purpose of holding a requisitioned meeting, the cost of the room hire should be charged to the requisitioning creditor and payment deposited into the estate account once received from the requisitioning creditor. Invoice for payment should be authorised and sent to EAIPS for payment from the estate account.

 

36.46 This paragraph has been deleted (February 2012)

 

[Back to Introduction] [On to Part 2 Fees on recall, rescission, stay or annulment of insolvency proceedings]