The rules on charging fees changed on 1 October 2015. This page relates to cases where Marc Landsman was appointed after this date. If you are looking for general information where he was appointed before this, look here.
Once we have been formally appointed by the creditors, we charge fees for doing all the work we have to. The work we have to do is slightly different in each type of insolvency, but can include:
Administration and Planning
Preparing the documents and dealing with the formal aspects of the appointment, statutory notifications and advertising, preparing documentation required, dealing with some of the normal letters; phone calls and emails, keeping case files, review and storage, case bordereau, case planning and administration, preparing certain reports to creditors, convening and holding meetings of creditors, maintaining and managing the cashbook and bank account, ensuring statutory lodgements and tax lodgement obligations are met.
Dealing with creditors, preparing certain reports to creditors, maintaining creditor information, reviewing and adjudicating on claims received from them.
Review and storage of books and records, look at suspicious transactions, review books and records to identify any transactions or actions which may be taken against a third-party to get back money for the creditors.
Realisation of Assets
Corresponding with debtors and attempting to collect in the book debts, liaising with the former bank regarding the closure of the account if it was in credit, selling other assets with the help of appropriate agents.
We also have to pay out-of-pocket expenses like we do before the meetings, and expect to be paid back for these. There is always an insurance premium (called the bordereau), sometimes more advertising, and other costs of sending letters. If we have to use an agent (such as an accountant, solicitor or auctioneer) we also have to pay them.
We normally seek our fees as follows:
|Individual Voluntary Arrangements||Percentage of assets realised |
(Usually about £1,000 - £2,000 per year)
|Company Voluntary Arrangements||Percentage of assets realised |
(Usually about £2,000 - £5,000 per year)
|Partnership Voluntary Arrangements||Percentage of assets realised |
(Usually about £2,000 - £5,000 per year)
|Liquidations||Fixed amount for general work, percentage of asset realisations and additional amount for payment of dividends.|
|Bankruptcy||Fixed amount for general work, percentage of asset realisations and additional amount for payment of dividends.|
|Administrations||Fixed amount for general work, percentage of asset realisations and additional amount for payment of dividends.|
Where we ask to charge a fixed amount for general work, percentage of asset realisations and additional amount for payment of dividends the initial fixed amount is calculated as £2,500 plus extra amounts based upon whether the case is a bankruptcy or compulsory liquidation (as some of the work done before insolvency, such as searches and entering standard case information onto our case management system will not have been done), an amount per creditor or employee we already know about and an additional amount based on any expected problems or extra work we can predict at the beginning. This reflects the complexity (or otherwise) of the case, any responsibility of an exceptional kind falling on the office holder and that a case with a lot of creditors will generally involve more work (even if only taking phone calls or processing letters with reports). The amount we will ask for is just one amount taking all these things into account.
In many cases we deal with there will not be enough from selling the assets to pay the costs of the insolvency. It therefore does not help most creditors to formally agree their claims, which can sometimes take a long time, (though this is sometimes needed by them for insurance or similar purposes). We have therefore decided that in order to reduce the costs generally, we will not agree all claims (though will do so if requested without extra charge) until we are ready to declare a dividend. This means that the general fixed fee can be lower.
We will therefore ask to charge another fixed fee for agreeing the creditors’ claims, doing the necessary statutory work and paying money to the creditors. This will be based upon the number of creditors and type of case (in bankruptcy and compulsory liquidation payments are made by requesting them from the Insolvency Service and cheques are sent by them to us to be forwarded, in creditors’ voluntary liquidation we need to physically write the cheque or make the electronic payment). Again, this amount will be stated up front (and is split between the types of claims).
If there are more creditors than we were told about, the fee for this part of the work will not go up.
We will also ask to charge a percentage of assets realisations as follows:
|Cash or equivalent (including bank balances held by the company or Carmichael & Co)||0%||10%|
|Other assets which are unlikely to be disputed but may need assistance from agents, such as stock or plant and machinery||10%||15%|
|Other assets which are more difficult to realise and tend to take longer to deal with (such as book debts or a property)||20%||30%|
|Assets which are likely to need a lot of negotiation to realise or tend to be most likely to need court action so take the longest to deal with (such as money owed to the company by the director, employee or associated company)||30%||45%|
We will always provide a specific list based on the expected assets when we seek agreement of our fees. Where there is a different type of asset in a case if it is declared in the Statement of Affairs a percentage will be stated, otherwise it will be charged at the highest rate (but see later).
These rates reflect that different amounts of work are required for different realisations (transferring a cash balance held by Carmichael & Co before liquidation is straightforward whereas agreeing repayment of an overdrawn director’s loan account is usually more complicated). If an asset has not been declared in the statement of affairs it is only likely to be found by investigation, so the increase reflects that this will have been needed and will not have been included in the fixed fee element.
The fee will never go up without the agreement of creditors or the Court.
The fee may go down if there are insufficient asset realisations with which to pay it, the office – holder decides to reduce it (for example the director agreed to repay the loan account immediately) or an unexpected asset is realised which does not fall into an agreed category, but charging a realisation fee of 45% is clearly excessive based on the spirit of the categories.
When we ask creditors to agree our fees we will provide a breakdown of the expected work and the specific percentages and fixed costs we want to charge – this page is very general advice, but we believe that it is enough for you to get an idea in advance of roughly what the costs will be if you decide to instruct us to help you.
If the assets are not enough to pay our fees, unless we have undertaken investigations for which the creditors have agreed an additional specific amount, we do not ask them to pay any more money – they have lost enough already.