Last week, Business Minister Jo Swinson announced proposed changes to “improve transparency in insolvency practitioner fees”.
From October 2015, it is proposed that Insolvency Practitioners (IPs) will be required to provide creditors with additional information about their fees and expenses. In particular, where an IP wishes his fees to be based on time costs, they will be required to provide an up-front estimate of their fees for creditor approval, before they can take their fees.
The aim of the measures is to give creditors a clearer indication of what the likely costs are going to be. IPs will be required to provide details of the work to be undertaken and an estimate of what it will cost to undertake that work.
IPs however should take note that while described as an estimate, it will in fact be a cap on their fees as they will not be able to draw remuneration in excess of the estimate without obtaining further creditor approval.
Only time will tell how the new requirements will work in practice. Let us know what your thoughts are by commenting below.