Petition deposit and costs (excluding partnership deposits)

May 2009

Part 4 Petition deposit and costs (excluding partnership deposits)

36.61 Petition deposit 

(Amended February 2012)

A winding-up or bankruptcy petition cannot be presented to court unless a deposit has been paid to the court and receipt produced (see paragraph 36.62) [Note 1][Note 2][Note 3] or the Secretary of State has given written notice to the court, that the petitioner has made suitable alternative arrangements to pay the deposit [Note 4][Note 5].  An exception to this requirement to pay a deposit is where the court, on hearing an application for an administration order in respect of a company, decides instead to treat the application as a winding-up petition and make any order which the court could normally make under section 125 of the IA86 (powers of court on hearing of petition)[Note 5b].

Courts must forward the deposit, with the details of the petition, to The Insolvency Service, Estate Accounts and Insolvency Practitioner Services (EAIPS) [Note 6]. The exception to this is where the court directs at the bankruptcy petition hearing, that instead of making a bankruptcy order against the debtor,  a qualified insolvency practitioner be directed (for a fee of £450 [Note 7] paid to the insolvency practitioner) to inquire into the debtor’s affairs and prepare a report, stating whether the debtor is willing and able to make an IVA proposal to his/her creditors, instead of entering into bankruptcy [Note 8][Note 9].  This procedure is available where a debtor has debts of less than £40,000 and assets greater than £4,000 [Note 10][Note 11]


36.62 Amount of Petition deposits

(Amended February 2012)

The Insolvency Proceedings (Fees) Order 2004, article 6 [Note 12], makes provision for the payment of deposits as security for the payment of fees in insolvency proceedings.

Article 6 provides that the appropriate deposits are as follows (with effect from 1 June 2011):

(a) in relation to a winding-up petition, the sum of £1,165;

(b) in relation to a debtor's bankruptcy petition presented by the debtor himself/herself [Note 13], the sum of £525;

(c) in relation to a bankruptcy petition presented under section 264(1)(a),(ba), (bb),(c) or (d) (by one of the individual’s creditors individually or jointly, or by a temporary administrator, or by a liquidator, or by the supervisor of, or any person who is for the time being bound by, an approved, or where a criminal bankruptcy order has been made against the individual, by the Official Petitioner) [Note 13], the sum of £700.

See Part 7 for information on the deposit required and treatment of the deposit in individual voluntary arrangements where the official receiver is acting as nominee (Fast Track Voluntary Arrangement - FTVA). See paragraph 36.71 for information on dealing with the deposit where annulment follows an FTVA.


36.63 Deposit repayment (including following annulment or rescission)

(Amended February 2012)

The deposit paid by the petitioner on presentation of a winding-up or bankruptcy petition is security for the payment of the relevant fees (fees W1 and B1, see paragraph 36.11).  In any case where an order is made (including any case where the order is made and subsequently annulled, rescinded or recalled), the deposit paid to secure the fees must be repaid to the person who paid it, except to the extent where the relevant assets are insufficient to discharge the fees for which the deposit is security [Note 14], unless the court orders otherwise. This means that if there were no or insufficient assets realised but for example fee B1 was charged in a bankruptcy case, the deposit can be retained to pay part of that fee[Note 12][Note 14].

The exception to this is, in a debtor’s petition case, the deposit will not be repaid,  unless it was paid by a third party to whom the deposit, or part thereof, should be repaid. Also the fee will not be repaid where, following the presentation of a debtor’s petition, the deposit is required to pay the fees to an insolvency practitioner appointed by the court under IA86 section 273(2) [Note 9] (see also paragraph 36.64).


36.64 Repayment of deposit where petition dismissed or withdrawn

(Amended February 2012)

Where a petition is dismissed or withdrawn before an insolvency order is made, generally the deposit will be repaid to the person who paid it [Note 15].  The exception to this is where, in the case of a bankruptcy petition, it is required to pay the fee arising under Article 5 of the Insolvency Proceedings (Fees) Order 2005/593 [Note 16], following the appointment of an insolvency practitioner by the court under IA86 section 273(2) [Note 9].  This is where the debtor’s unsecured debts are less than the small bankruptcies level and the court decides an individual voluntary arrangement may be more appropriate than bankruptcy. Where the deposit was paid from third party funds it will be repaid to the third party who made the payment.


36.65 Paragraph deleted February 2012 

36.66 Deposit amount changed after petition presented

As explained at paragraph 36.61, a petition can only be filed on the production of a receipt for the deposit payable [Note 1][Note 2][Note 3].The petition deposit will be the appropriate amount due as at the date that it is paid to the court (see paragraph 36.62).  If the amount of the deposit has changed before the making of the insolvency order (as a result of updated fees amendment legislation coming in to force in the interim period), the deposit paid is still valid and the official receiver will continue the administration of the case using the original deposit as security for payment of the fees.

Where in a bankruptcy case there is an annulment hearing and the petition is re-listed for hearing, it is open to the official receiver to seek an order of the court that, where the deposit amount increased after the original petition was filed, the difference required to reach the increased deposit amount is paid, as a condition of the petition being re-listed.  Without such a court order the official receiver will have no grounds to recoup the difference from the petitioner.


36.67 Frequent petitioner accounts

(Amended February 2012)

The Insolvency Rules 1986 (as amended) allow creditors to make alternative arrangements for the payment of deposits. The amendment provides that a deposit must be paid to the court before a petition can be filed [Note 1][Note 2][Note 3] unless the Secretary of State has given written notice to the court that the petitioner has made suitable alternative arrangements to pay the deposit [Note 4].  Petitioners may set up an account with EAIPS which will fund only the deposits on any petitions presented which result in orders being made. This means that those petitioners with approved accounts are not required to pay a deposit to the court upon filing a petition. This provision benefits those creditors who issue large numbers of petitions that are subsequently dismissed/withdrawn, as funds are only taken when the order is made. EAIPS will notify the HM Courts and Tribunals Service with the particulars of creditors who open a frequent petitioner account with The Service.


36.68 Current frequent petitioners

The first frequent petitioner accounts were set up for the Inland Revenue and HM Customs and Excise. Although now combined as HM Revenue and Customs, currently two separate frequent petitioner accounts are maintained, one for Revenue and one for Customs,  invoiced as two separate entities. These have been in operation for all petitions presented by HM Revenue and Customs since 1 April 2004.  There are no other frequent petitioners at this time and it is not anticipated that many other petitioners will take up this option.


36.69 Dealing with the deposit in frequent petitioner cases

(Amended February 2012)

In practice, when a frequent petitioner presents a petition, they will not have to pay the deposit to the court. If the petition is subsequently dismissed or withdrawn, no deposit monies will have changed hands between The Service and the petitioner (however, the court fee is still payable to the court upon presentation of the petition). This will have a positive effect on reducing the volume of cheques currently issued each day in respect of refunds of deposits.

If the order is made, ISCIS will automatically post the amount of deposit onto the case’s 00 General Fund and conversely,  debit the frequent petitioner’s account which holds the funds received in advance for the expected volume of orders. Any subsequent refund of deposit, following an annulment or where there is a credit balance etc., will be processed as per current practice by a cheque payment made to the petitioner. Twice monthly the frequent petitioner is invoiced to top-up their account to a pre-agreed limit. The accounts are carefully monitored by EAIPS to ensure that they do not become overdrawn.

EAIPS have responsibility for managing the Frequent Petitioner accounts and are also responsible for giving notice to the HM Courts and Tribunals Service when frequent petitioner status is granted or revoked under Insolvency Rules 1986 Rules 4.7 and 6.10 (as amended).

Should there be in any problems or errors in connection with Frequent Petitioner Accounts, or for all enquires relating to petitions and deposits processed by EAIPS,  please contact the Petition, Deposits and Collections team in the first instance by emailing the EAIPS.P&D inbox, from where you will receive a response within three working days.  From 5 December 2011 the Petitions, Deposits and Collections Team Leader is Tina Littlewood, available on telephone number 0121 698 4116.


36.70 Centralised processing of court petitions and deposits

(Amended January 2012)

To speed up the banking of deposits received from the courts (both High and county), and to remove the burden of work still undertaken by official receivers’ offices in relation to deposits,  the centralised Petitions & Deposits Team in EAIPS receives all court deposits and petition details. The team will enter case details for winding-up and creditor bankruptcy petitions onto ISCIS and bank all deposit monies on the day of receipt. Debtors' petition details are checked against ISCIS although it is expected that such cases will have already been input locally following contact (normally by telephone) from the court. HM Courts and Tribunals Service has not requested any change to this practice. All petition paperwork will be sent by DX from EAIPS to the relevant official receiver's office each day. The courts send copies of orders and statements of affairs to the official receiver. All matters such as order dates, adjournments and dismissed/withdrawn petitions and linking of partnership cases will be dealt with by the official receiver's office.


36.71 Annulment following FTVA - Petition deposit

In any case where the bankruptcy order is subsequently annulled following the approval by the creditors of an FTVA, the petition deposit shall be returned to the person who paid it [Note 14]. Where a bankrupt has presented his/her own petition, the deposit may have been paid by the bankrupt. In such circumstances, on the making of the annulment following the approved FTVA, the petition deposit will be returned to the bankrupt and the official receiver should ask the bankrupt to account for this in the FTVA proposal


36.72 Order of priority of payment of expenses and repayment of deposit (applicable to cases where insolvency proceedings commenced prior to 1 April 1995)

(Amended February 2012)

Rules 4.218 and 6.224 provide details of the order of priority of payment of all expenses from the insolvent’s estate.  Where winding up proceedings commenced prior to 1 April 1995, or a bankruptcy petition was presented, prior to 1 April 1995, the deposit should be refunded after the expenses of preserving, realising or getting in the assets, including the expenses or disbursements incurred by the official receiver,  but before the old official receiver’s administration fee is charged to the estate. The deposit in these cases is also repayable before other fees including the Secretary of State fee (although it should be noted that where the insolvency order date is before 1 April 2004 the requirement to charge a Secretary of State fee is now abolished  - see paragraph 36.36). In such cases, it is possible to refund the deposit (or part of it) and leave a debit balance on the estate account [Note 17][Note 18].   


36.73 Changes to order of priority of payment of expenses following the introduction of the Insolvency (Amendment) Rules 1995 (applicable to insolvency proceedings commencing on or after 1 April 1995

(Amended February 2012)

Where winding up proceedings commenced on or after 1 April 1995, or a bankruptcy petition was presented on or after 1 April 1995, IR86 rules 4.218(1)(c) and (d) [Note 19] and 6.224(1)(c) and (d) of the 1986 Rules [Note 20] were amended with regard to the order of priority in which the expenses are payable. The positions in the order of priority were changed so that the official receiver’s administration fee and remuneration became payable before the repayable deposit.


36.74 Deposit to be returned where petitioner’s costs forfeited

(Amended February 2012)

Where the liquidator or trustee proceeds with a distribution to creditors, should sufficient funds exist following payment of expenses ranked as a higher priority (see paragraph 36.73), he/she is required to repay the costs of the petitioner (with the usual exception of the debtor’s deposit etc., as detailed at paragraph 36.63) and of any person appearing on the petition whose costs are allowed by the court [Note 21][Note 22].  Where the office-holder requires the petitioning creditor to decide their costs by detailed assessment (see paragraph 36.75) [Note 23][Note 24]and the petitioner fails to commence proceedings to decide these costs within 3 months of the requirement, he/she forfeits his/her claim to those costs [Note 25][Note 26]

The instruction requiring the repayment to the petitioner of any amount repayable from the deposit lodged as security for the payment of fees [Note 27][Note 28] appears higher in the order of priority of expenses at Insolvency Rules 1986 rule 4.218(3) and rule 6.224(1) than payment of the petitioner’s costs[Note 21][Note 22].  This means that irrespective of the forfeiture of the petitioner’s costs, the petition deposit should be repaid to the petitioner (subject to the usual exceptions, see paragraph 36.63), to the extent that it is not required to pay fees where the insolvent’s assets are insufficient.


36.75 Detailed Assessment of costs

(Amended February 2012)

As a general guide, a bill for petition costs up to £2000 in companies and £1500 in bankruptcies can be approved by the official receiver (or his/her deputy) for immediate payment. Depending on the circumstances of the case it may be that a higher amount is justified where, for example, service of the petition has been resisted.  Where the costs are considered excessive, the petitioning creditor’s solicitor should be informed and asked to reduce their bill to an acceptable level or submit the bill for assessment and provide a costs certificate for payment. Detailed assessment should only be requested where there are sufficient funds to enable the petition costs to be paid in full or where it is known that funds will become available shortly.  For further information on assessment of petitioner’s costs see also Chapter 39, in particular paragraphs 39.6, 39.16 and 39.17.

For information on deposits received in partnership cases, go to Part 5 of this chapter.


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