The Insolvency Rules 1986 (as amended), and best practice guidance, require Insolvency Practitioners to provide creditors with an estimate of their fees prior to seeking approval of the basis of their remuneration where they are proposing to be remunerated on a time costs basis.
It is difficult to estimate accurately how much time will be spent dealing with a particular case. This is especially so where approval for the basis of remuneration is sought early on in the matter and at a time when the Insolvency Practitioner has limited information about the insolvent entity itself, the creditors and any possible claims that s/he may be able to bring.
Generally the Insolvency Practitioner will ask creditors to determine the basis of his/her remuneration at an early stage so that all parties know how the Practitioner is to be paid. In order to save costs, this is usually dealt with at the same time as other matters upon which the Insolvency Practitioner requires a decision from creditors.
Our estimates are based upon historical data from similar cases that our Insolvency Practitioners have worked on. Although this is likely to give a more accurate idea of the potential costs of the matter, as no two cases are the same it can be only an estimate. Once it is approved by creditors the estimate acts as a cap and if it is exceeded, or we anticipate that it will be exceeded, we are required to seek further approval from creditors.
In order to prepare the estimate we use information provided by the insolvent entity at the outset of the case. In cases where this information proves to be inaccurate, the estimate will not be accurate and we may need to revert to creditors for approval of a further estimate.
We anticipate that the factors likely to have the most impact upon the fees estimate are:
Version 1: October 2015