May 2009

Part 2 Fees on recall, rescission, stay or annulment of insolvency proceedings

(Amended February 2012)

36.47 Charging time and rate where there is an annulment, recall or stay of proceedings

If the winding-up order or bankruptcy order is recalled, rescinded, stayed or annulled (annulment is only applicable in bankruptcy proceedings), the full administration fee (fee W1 or B1) should only be charged when it can reasonably be said that the official receiver has undertaken material work on a case.  With regard to a stay of company or bankruptcy proceedings, the extent of the statutory duties undertaken by the official receiver may be dictated by the instructions included in the relevant order staying the proceedings.  The official receiver should carefully check the order to ensure that he/she meets the terms of that order,  see also paragraph 6.34. The official receiver's full administration fee should not be charged where, for example, he/she has not issued initial notices or committed other expenditure in the case.

Where the full administration fee is not justified, the (reduced) administration fee to be charged should be based on the time he/she has spent undertaking work as applied by the hourly rates set out in the Insolvency (Amendment) Regulations 2004 (see Annex E) and the case disbursements (for example, the cost of a Gazette notice or advertisement). This 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. At the appropriate time, the official receiver must ask the court to assess the official receiver's fee as this calculated sum.

Information can be found at paragraphs 6.90 and 6.91, on charging time and rate fees and returning the petition deposit following the rescission or recall of a winding-up order (where the order was made on or after 1 April 2004). 

Where a bankruptcy order is annulled on payment in full grounds, it is usual that the extent of work required to prepare the report to court and establish payments to creditors etc., will necessitate the charging of the full administration fee.  Where the annulment is made on an ought not to have been made application and the time and rate calculation is used to calculate a reduced administration fee, the court will order that the administration fee shall be reduced from £1,715 (the current full administration fee in a bankruptcy case) to £X (the calculated sum as accounted for by the official receiver).

Refer to Annex C attached to this chapter to confirm the most recently updated fee information.

The official receiver may decide it is appropriate to charge the full administration fee where the time and rate fee plus disbursements will be in excess of the general administration fee (for example, where considerable time and staff resources have been employed to discover information to submit the required report to court), even though the preliminary interview may not have been completed prior to the annulment application hearing.  Where the official receiver considers that the full administration fee should be charged, it should be noted that the majority of disbursements (those actions carried out by the official receiver as part of his/her general duties e.g. reporting to court) are covered by the full fee (see paragraph 36.16 and 36.17) but as the administration fee does not include the cost of any disbursements associated with the realisation of assets or the distribution of funds to creditors, these should be charged separately.

For further information on charging costs and fees in annulments refer to Chapter 6A Part 5,  in particular paragraphs 6A.74 to 6A.78.

Where a (former) bankrupt has failed to follow proper procedure in making an annulment application, for example, by not advising the official receiver of the hearing thereby denying the official receiver the opportunity to seek his/her costs in the proceedings, the official receiver may seek a review of the annulment order [Note 1]. Unless the petition has not been dismissed,  but has been adjourned, following annulment the bankruptcy proceedings are in effect “closed” as far as the court is concerned, which means it will not be possible to make an application for a costs order, unless an application is made to court to review the annulment order (see also Chapter 6A, paragraphs 6A.76 and 6A.77).

The official receiver should also consider the following options to recover costs and fees in the proceedings:

• Using the petition deposit to discharge the outstanding fees,  to the extent that assets recovered are not sufficient (see paragraph 36.63)
• Where funds are held from the realisation of assets these could be retained to recover the official receiver’s costs        
• Writing to the (former) bankrupt to seek payment of costs, informing him/her that if  agreement cannot  be reached,  the official receiver will seek a review of the annulment and this could result in the individual being declared bankrupt again.

[Back to Part 1 Fees and costs in insolvency proceedings] [On to Part 3 Expenses in insolvency proceedings]