What counts as an expense?—the position under the Insolvency (England and Wales) Rules 2016
Produced in partnership with William Willson of South Square Chambers
What counts as an expense?—the position under the Insolvency (England and Wales) Rules 2016

The following Restructuring & Insolvency practice note produced in partnership with William Willson of South Square Chambers provides comprehensive and up to date legal information covering:

  • What counts as an expense?—the position under the Insolvency (England and Wales) Rules 2016
  • What are expenses?
  • Liquidation and bankruptcy
  • Expenses properly incurred in realising assets of the company/bankrupt
  • Costs of the petitioner
  • Necessary disbursements
  • Administration
  • Expenses properly incurred by administrator in performing their functions
  • Necessary disbursements

What are expenses?

All fees, costs, charges and other expenses incurred in the course of winding up (IR 2016, SI 2016/1024, rr 6.42 and 7.108), administration (IR 2016, SI 2016/1024, r 3.50) or bankruptcy (IR 2016, SI 2016/1024, r 10.148) proceedings are treated as expenses of the winding up or the administration or, as the case may be, of the bankruptcy (IR 2016, SI 2016/1024) (in each case, from 6 April 2017).

Liquidation and bankruptcy

From 6 April 2017 the rules relating to liquidation and bankruptcy expenses are set out respectively at IR 2016, SI 2016/1024, r 6.42 (creditors’ voluntary winding up), IR 2016, SI 2016/1024, r 7.108 (winding up by the court) and IR 2016, SI 2016/1024, r 10.149 (bankruptcy). Since they contain a number of provisions drafted in near-identical terms, the following comments apply to all of these rules.

Whether expenditure by a liquidator or trustee should count as an expense of the liquidation or bankruptcy is not a matter which the court has any discretion to determine—it merely depends on whether the expenditure in question falls within one of the categories (Re Toshoku Finance UK).

However, where an office-holder is uncertain, they may seek guidance from the court in anticipation of incurring any particular expenditure in order to determine whether it will be treated as an expense of the liquidation/bankruptcy (Re Demaglass Holdings).

Though the list

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