A Guide for Shareholders on Liquidators' Fees

Shareholders' Guide to Liquidators' Fees and Guidance

Company liquidation is defined in three distinct ways;

• Compulsory, where a creditor petitions to place the debtor company into liquidation
• Creditors’ Voluntary Liquidation, where the directors acknowledge that their company is insolvent and the shareholders voluntarily pass resolutions to place the company into liquidation
• Members’ Voluntary Liquidation, a process of closing a solvent company and converting its assets into cash that can be distributed amongst shareholders

When a company goes into liquidation, the costs of the proceedings are usually paid out of its assets. The first two types of liquidation mentioned above are insolvent liquidations and there is no prospect of a return to the members.

A Members' Voluntary Liquidation is different. The members (shareholders) will see a return after creditors have been paid in full, and they therefore have a direct interest in the level of costs, and in particular, the remuneration of the insolvency practitioner appointed to act as liquidator.

The insolvency legislation recognises this interest by providing mechanisms for members to fix the basis of the liquidators’ fees, (also referred to a ‘remuneration’).

This guide (see PDF below) is intended to help shareholders be aware of their rights to approve and monitor fees, explains the basis on which the fees are fixed, and how shareholders can seek information about expenses incurred by the liquidator and challenge those they consider to be excessive.

Begbies Traynor's Guide for Shareholders - Liquidators' Fees