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Following the recent announcement that insolvency practitioners (IPs) will in future be required to provide estimates of fees upfront to creditors, the statutory instrument that gives effect to that announcement has been laid before Parliament.
Jo Swinson MP, Parliamentary Under Secretary of State for Employment Relations and Consumer Affairs, announced by written statement on 3 March 2015 that IPs will be required to provide extra information to creditors about their fees from October 2015. They will need to give a summary of estimated costs and work to be undertaken, following concerns the current system permits excessive hourly fees to be charged.
In responding to the announcement, Giles Frampton, president of R3, said:
'We are very pleased with the government's practical proposals for updating the insolvency fees-setting process. An up-front estimate should work for both creditors and the insolvency profession, and will help improve trust and transparency in our insolvency regime. The profession first supported an up-front estimate system in 2011 and we are pleased to see it set to become a reality.'
The Insolvency (Amendment) Rules 2015 (SI 2015/443) were laid before Parliament on 3 March 2015, and will come into force on 1 October 2015 insofar as the requirement for IPs to provide upfront estimates of costs to creditors. This will give IPs time in which to adapt their systems in readiness for the change.
Transitional provisions mean that this requirement will essentially only apply where an insolvency office holder is appointed after 1 October 2015. Further, this requirement applies only to administrations, compulsory and creditors' voluntary liquidations, and bankruptcies.
The announcement and the statutory instrument are underpinned by the office holder providing a 'fees estimate', which is defined as meaning a written statement that specifies:
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Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.
Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.
0330 161 1234