Will there be fewer business rescues if insolvency fees change?

Written by companyrescuelondonadmin 3 April 2017

There is quite a debate going on at the moment regarding the new proposals for insolvency fees. Much of the industry and several insolvency groups believe the introduction of fixed fees and percentages of costs will see fewer business rescues as fewer practitioners will take on cases. 

According to R3, 77% of insolvency practitioners believe this to be the case with 40% suggesting creditors will see worse returns.  It’s also thought Official Receivers will be swamped with cases if a fixed-fee system goes ahead. “Creditors will end up over-paying just as often as insolvency practitioners end up under-paid” says Chief Executive of R3, Graham Rumney. 

By scrapping the hour-per-hour charges, it may also prove difficult for IPs to estimate costs on more complex cases.  

The Insolvency Service, who behind the new proposals, sees the fixed-fee system as a way to improve value for money for unsecured creditors by making the system more transparent and easy to understand. 

Many believe the Government are looking at this from the wrong angle and should set proper guidelines for fees rather imposing a fixed fee or a percentage of assets realised. It’s also feared that smaller firms will be knocked as they may be unable to take on small cases.

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Categories: Insolvency, Creditors Voluntary Liquidation CVL