Insolvency fees could be fixed
INSOLVENCY practitioners trying to salvage value within collapsed firms will no longer be able to charge an hourly rate, to ensure creditors get a fair deal, under plans put out to consultation by the government yesterday.
The Insolvency Service said fees should instead be flat-rate amounts or a percentage of the value the practitioners manage to crystallise from the stricken business, in the absence of secured creditors.
The organisation also wants stronger powers to deal with creditors who complain about excessive charges.
“These new powers… will make sure that they have the right tools to tackle rogue operators and enforce these new rules,” said business minister Jenny Willott.
But R3, which represents insolvency practitioners, warned that it had “serious concerns” about the fees change.
“These proposals will have unintended and unwanted consequences, and it would be the UK’s creditor community that would lose out were they to be implemented,” said vice-president Giles Frampton.
The group instead called on the government to encourage unsecured creditors to engage with the insolvency process rather than “experimenting with the basic fee-setting mechanisms”.