Getting involved

Why should I get involved?

Losing money you are owed by a company or an individual that has become insolvent can be a difficult, stressful and time consuming situation.  But, getting involved in the procedure means you will have a better understanding of what is happening; what the likely outcome is for you as a creditor and why:

Getting your money back

It is important that the office holder knows who you are, knows how much you are owed and knows about your relationship with the insolvent party. In most instances if you are an unsecured creditor you are unlikely to get back all that you are owed, and unfortunately might not get any money returned at all; but if the Office holder isn’t aware you have a claim in the first place, you won't be included if there is a payment made to unsecured creditors. Importantly, if you have reservation of title (often referred to as retention of title abbreviated to ROT) terms in your contract with the company or debtor you should approach the office holder as soon as possible and advise them of your rights.  Also, if you have any information about the whereabouts of assets, or actions the office holder could take to improve realisations, share it with them – it may result in a better outcome.

Bringing directors who have committed bad practice to justice

Sometimes those working for insolvent companies have done something which has made matters worse. This can be anything from borrowing money from the company to committing fraud. These people will only be brought to justice if the office holder is aware of those actions. However, it’s not always obvious to the office holder that there has been bad practice; they often rely on creditors to tell them – this is another reason why you are so important to the insolvency procedure.

How do I find out about an insolvency?

Finding out that an insolvency procedure has begun is the first part of engaging as a creditor.

There are several ways to find out if an individual or company, who owes you money, has entered an insolvency procedure:

Creditor actions

The first is easy: because you, as someone who is owed a debt that hasn’t been paid, have asked the court to make an individual bankrupt or because you’ve asked the court to wind-up a company. You can read more about how to go about doing this on the government’s website here (bankruptcy) and here (winding-up a company).

Being contacted by an office holder

If you have not been involved in starting insolvency proceedings, it is most likely that you will find out an insolvency procedure has begun because the office holder dealing with the case has contacted you by post or email.

Other ways to find out

Unfortunately, it is not always possible for the office holder to identify everyone that is owed money by an insolvent company or individual.

If you are aware of an insolvent individual or company that owes you money, and you have not been contacted by an office holder, it is important that you notify the office holder how much you are owed. 

There are several ways you can find out the name and contact details of the office holder you need to speak to:

  • To find out who has been appointed to deal with an insolvent company, a search of The Gazette (the UK’s official journal of public record) or Companies House should provide the detail.

Once appointed, an office holder will try to find out who the insolvent individual or company owes money to. To do this, an office holder will mainly rely on information provided by the insolvent individual or the insolvent company’s directors. The office holder may also go through the insolvent individual’s or company’s financial records and correspondence including email. 

Once it has been established who the office holder thinks the creditors are, he or she will contact them to let them know an insolvency procedure has begun. Although this will most likely be by post, if you previously used email as your main form of communication with the insolvent individual or company, the office holder may continue to do so unless you decide to let them know not to use email.

It is important to let the office holder know of any changes to your contact details.

What information will I need to provide to the office holder?

Details of your claim

It is very important that you can prove to the office holder that you are owed money by an insolvent company or individual. Once the office holder has this proof, your claim can be processed.

If your claim is £1,000 or under, the office holder may decide to treat your debt as a ‘small debt.’  If so, the office holder will notify you of the amount believed to be owed to you, confirm your claim has been accepted in that amount for the purpose of paying a dividend and advise you that you do not need to send in a proof.  You must however, tell the office holder if your claim differs from the amount stated and will then be required to submit a proof in support of your claim.  It is important to note that if you want to take part in any decision procedure you will need to submit a proof regardless of whether the office holder has notified you that your debt is being treated as a small debt. 

You can request a proof from the office holder (although you should have been provided with one when you were first contacted). This proof sets out the information you will need to include for example:

  • details of any security you may have, for example a charge on an asset.
  • details of any document that supports the debt, for example invoice dates and amounts (although not the actual documents unless requested to do so by the office holder).
  • if you have a reservation of title, you will need to provide details in relation to the goods to which the debt relates.
Details of any concerns you may have about how the company’s or individual’s business has been conducted or an individual’s personal affairs conducted and on potential recoveries for the insolvent estate

Insolvency practitioners have the power to investigate any wrongdoing by an insolvent company or individual. If you are aware of any wrongdoing that relates to the insolvency, you should tell the office holder.  This may help the office holder to recover assets that the company or individual is withholding and helps in the office holder’s duty to report misconduct to the government. The insolvency practitioner will be guided by input from creditors. 

Examples of wrongdoing include:

Companies: allowing a company to continue to trade while the directors knew or should have known that the company couldn’t pay its debts; fraud.

Individuals: hiding assets like cars, houses or jewellery; transferring assets to others for free or for a price below their true value before the insolvency procedure began.

What information will I receive from the office holder?

Because the office holder is responsible to the creditors in an insolvency, he or she is required to provide a great deal of information to you at various stages of the insolvency process. In England and Wales, the office holder might send information to creditors by post, email or uploaded to a secure website. This information can be a one page notice of appointment to many pages providing detailed information about the strategy to deal with the insolvent business or individual as well as periodic reports and eventually a summarised account of the entire process.   This can be good if you want to take an active role in the insolvency but if you are only interested in any payment you will receive, you may get lots of communication that goes unread and funds can then be wasted providing you with the information.

You have the option of opting out from receiving most of the correspondence relating to the insolvency. The office holder will let creditors know about opting out in the first communication with you. Even if you opt out, you are still entitled to vote in a decision procedure but won’t be sent the related correspondence so may not know a decision procedure is taking place.  You will also still receive a dividend payment if there are funds in the procedure to enable one or more to be paid.  If you do choose to opt out you can opt in again at any point, you just need to let the office holder know.

In a Scottish insolvency, office holders do not currently have the option of uploading information to a website and so you will continue to receive the detail by post.

You may receive the following updates and notifications:


The first thing you will receive from an office holder is notification that an individual or company has entered an insolvency procedure. This notification will probably consist of several pages including a covering letter and an official notification of any decision procedure. You may also receive a copy of a statement of assets and liabilities known as a statement of affairs. This information may be reliant on information provided by the debtor or directors and so may not be up-to-date or correct.  It is important to respond to this notice to correct any errors.  At this stage, you might also receive some information about the fees that an insolvency practitioner may, subject to approval, charge for handling the case.  In most corporate insolvencies, the insolvent business will stop trading. In cases where the business continues to trade, the initial correspondence will let you know and propose terms of trade.

Advice of website use

After sending you notice of the office holder’s appointment, the office holder may decide to upload all future notices, documents or information for creditors to a secure website (except for notices of intended dividends).  If so, the office holder only needs to tell you once by post or email that he or she is doing this.  The office holder will need to explain how you can access this online information and let you have any necessary passwords. If information is uploaded, you may hear nothing further by post or email from the office holder so you may want to make a note of the times in the process that something may be uploaded, for example on the anniversary of the appointment.

If an office holder uses a website to deliver documents relating to the insolvency, you will be able to access all documents on that site until two months after the insolvency ends.

However, as a creditor, you can ask the office holder to send you hard (paper) copies of all documents throughout the course of the insolvency.

Information about claiming in the insolvency

A proof form will usually be included in initial correspondence from an office holder. You can use this form to detail any debts you believe you are owed by the insolvent company or person. It is important you fill the form out and return it to the office holder as soon as possible.

However, if your claim is for an amount of £1,000 or under (which may be referred to as a ‘small debt’), the office holder may decide to treat your debt as having been proved for the purpose of paying a dividend and will notify you that you will not need to submit a proof unless you believe that the amount due to you is different from the amount the office holder advised you.  You must tell the office holder if your claim does differ and will then be required to submit a proof in support of your claim.    

As mentioned earlier, if you want to take part in any decision procedure you must submit a proof regardless of whether the office holder has notified you that your debt is being treated as a small debt.

If a dividend is going to be paid in the insolvency, the office holder will review the proofs submitted and can reject the whole or part of your claim, for example if there is insufficient information to show the money is owed to you.  You will be provided with the reason for the rejection in writing and if you are unhappy with this decision you can apply to court for the decision to be changed.

Meeting and proxy forms

If a meeting of creditors is going to be held, you will receive a notice of the meeting including details of what will be covered at the meeting and a proxy form.  If you want your vote to count, you should complete and return the proxy form. There is no need to attend a meeting for your vote to count - you can simply nominate (ask) the chair of the meeting (usually the office holder or a member of staff) to attend on your behalf as your proxy or ask someone else to attend the meeting in your place.  You would authorise your proxyholder to vote on your behalf under a general proxy or provide the chair or other proxy with specific instructions on how you want your vote to be used, for example in favour of the office holder’s fee proposal.  You must return the proxy before the creditors meeting unless it is an insolvency being dealt with under Scottish law where you can take the proxy along to the meeting.

It is important to note that from 6 April 2017, meetings that are convened under insolvency law in England and Wales are likely to be convened as virtual meetings - physical meetings will no longer be the norm but the exception.  A virtual meeting is when creditors are not invited to be at a physical location but may participate in the (virtual) meeting or communicate directly with the office holder convening the meeting and others present at the (virtual) meeting.  Creditors are however able to request physical meetings in cases where at least 10% of the creditors in value, or at least 10% of the creditors in number or at least 10 creditors formally request such a meeting.

Notices of decision procedures or deemed consent

During the insolvency process the office holder may have to ask your permission to do something, for example agree how he or she is going to be paid for their work.  You will either be sent by post or by email or the notice will simply be uploaded to a website (access to which you will already have been told about by the office holder), details of the decision to be approved or advised that it is deemed you will approve the decision unless you say otherwise.  If you are invited to vote on something by correspondence, you will be provided with a voting form for completion.  The office holder will advise you of the deadline date for the return of the completed form if you want your vote to be counted.

Proposals in an administration procedure

If you are owed money by a company in administration, you will receive a pack of documents called the administrator’s proposals. You should receive these within eight weeks of the administration starting. The most important information in these reports relates to: 

  • what led to the insolvency;
  • what the administrator intends to do with the business for example is it being traded;
  • the steps taken by the administrator so far; 
  • the administrator’s fees;
  • a breakdown of the administrator’s work and costs so far;
  • and how the administrator expects the insolvency to end.

In some cases, creditors will also be asked to vote on whether to approve the administrators' proposals.

Other documents in the pack will include financial information about the company and proof forms.

SIP16 pre-packaged ‘pre-pack’ administrations

If a pre-packaged sale, also referred to as a ‘pre-pack,’ has taken place in an administration procedure, you should receive a document complying with Statement of Insolvency Practice 16 (known as a ‘SIP16’ statement) from the administrator. Ideally, this is sent to you with the first notification to creditors of the appointment of the administrator but if it is sent separately, you should receive it within seven calendar days of the business sale. This report will tell you about the pre-pack, including the price obtained for the business, how the assets were valued, and whether the new owners of the business were connected to the old owners.

Progress reports

In most insolvencies, the office holder must provide you with progress reports for each 12-month period from the date of their appointment (in England and Wales administrations, Scottish liquidations and some Scottish bankruptcies, updates are required every six months.) The reports will usually include: 

  • Details of progress during the period covered by the report including a summary of the receipts and payments during the period; 
  • If possible, an indication of the likely return to creditors;
  • Any amounts already paid to creditors;
  • What money has been taken to pay for the expenses of the insolvency (including fees);
  • The basis of the office holder’s fee approval and what fees have been drawn;
  • If fees are approved on a time cost basis, details of time spent to allow the creditor to compare with fee estimates;
  • If the office holder believed the fees’ estimate previously provided is likely to be exceeded, an explanation will be provided to you.  You will also be told if the office holder is seeking approval to draw additional fees above the original estimate;
  • Details of what the office holder still needs to do;
  • A statement of the creditors’ rights to request further information and rights to challenge the office holder’s fees and disbursements.  You have eight weeks after receiving the progress report which first reports the fees and/or disbursements charged which are in question to apply to court to challenge.
Final report (in bankruptcy) Final account (in liquidations) Final progress report (in administration)

At the end of an insolvency procedure, creditors will receive:

  • a final report in a bankruptcy; 
  • a final account in a winding up;  
  • a final progress report in an administration. 

In bankruptcy and winding up, this report covers the whole period of insolvency and must include:

  • a summary of the receipts and payments;
  • details of any payments made to creditors; 
  • details of the basis of the approved office holder’s remuneration and details of the amount drawn together with details of the office holder’s expenses.

The final progress report in an administration includes all the information required in a progress report and:

  • a summary of the administrator’s proposals;
  • any significant changes from those proposals;
  • steps taken during the administration and the outcome. 

If the final report, progress report or account includes some fees that have been charged since the previous report, you have eight weeks after receiving the final report or account to apply to court to make a challenge.

If you have not received any of the above information, if you need help completing various forms, or if you have questions about any of the above information, please speak to the office holder handling the insolvency in which you are a creditor.

Creditor approval

Creditors are often asked to get involved in an insolvency process, for example approving the appointment of an office holder or agreeing the basis of remuneration.  Physical meetings were used as a matter of course to seek the views of creditors on such matters and although this is still the case in Scotland and Northern Ireland, the position in England and Wales has changed and there is now access to a variety of decision procedures or the deemed consent procedure.

What are the decision procedures?

The decision procedures available to an office holder are:

  • correspondence
    details are posted or emailed by the office holder inviting you to vote on an issue and explaining how you can vote on the matter.  If you are invited to vote on a proposal by correspondence you will be provided with a voting form for completion.  The office holder will advise you of the deadline date for the return of the completed form if you want your vote to be counted.
  • electronic voting
    you may be asked to participate in an electronic vote.  The office holder will send you details of the decision to be voted on and tell you how to take part in the vote included any passwords needed.
  • meetings
    A meeting of creditors allows participants to communicate with each other and vote on an issue. They can be physical meetings where participants are present in the same geographical location or virtual meetings where participants might be using an online system to communicate.  Whether they are physical or virtual, there is no need to attend the meeting in person for your vote to count but if you want your vote to count if you do not attend the meeting you would need to submit a completed proxy form.
  • physical meetings
    the office holder is no longer able to convene a physical meeting as the default way to seek approval to decisions from creditors.  However, you can request that the office holder does convene a physical meeting instead of the proposed decision procedure being used.  The office holder must convene a physical meeting if one of the following are met:
    10% of all creditors in value would need to be in favour of holding a physical meeting; or
    10% of the total number of creditors; or
    10 individual creditors.
  • virtual meetings
    this is just like a physical meeting but you do not actually have to attend a specific location in person to take part in the meeting.  Typically, a virtual meeting will involve a telephone conference call or perhaps a skype call.
    A virtual meeting is likely to be used when creditors are asked to consider a proposal for a voluntary arrangement or for fixing the office holder’s fees.
    The notice of the meeting will tell you how you can take part in the meeting and will include any passwords needed to access the meeting.
    With some exceptions, decisions are made at creditors’ meetings if they are approved by more than half by value of the creditors voting.
  • Deemed consent is also a decision procedure as it enables equal participation by all creditors but it can't be used in some circumstances, for example it can't be used for the approval of the office holder's fees but it can be used to agree the appointment of the liquidator in a creditors' voluntary liquidation.
    Whenever a decision procedure is used, you will be invited to form a committee, even if you have said no before.
What is the deemed consent procedure?

Deemed consent allows an office holder to make a decision in an insolvency, for example the appointment of the liquidator in a creditors’ voluntary winding up or the approval of an administrator’s proposals in an administration process. If creditors don’t object, the decision is confirmed.

As already mentioned, the deemed consent procedure is a decision making procedure and enables a decision to be made by creditors by not objecting to the course of action which has been suggested by the office holder. The office holder will send details of the decision to be made to you and the steps you will need to take if you don’t agree with the decision.  If you agree with the decision you don’t need to do anything but if you don’t agree with the decision, you must let the office holder know in writing by the decision date stated in the deemed consent correspondence.  If 10% or more in value of creditors object, the decision will not be made and instead the office holder will use an alternative decision procedure to allow you to reconsider the decision.

Decision procedures and technology failures

Where electronic voting or a virtual meeting is used for a decision procedure and a system, signal or technology failure prevents you from participating in the vote or meeting, it is important that you inform the chair of the meeting (usually the office holder) as soon as possible and before 4pm of the next business day for your vote to be counted.

Once the chair knows you have been excluded, the meeting may be suspended or adjourned.  If the meeting continues in your absence you may be able to complain if you feel you have been prejudiced.  You are also able to complain if any other creditor has been excluded if the vote of the excluded party would have affected the resolution.

Which decision procedure or deemed consent procedure am I likely to see being used in each insolvency procedure and at what stage of the process?

Whatever route to formal insolvency is taken, either an insolvency practitioner or Official Receiver will be appointed to deal with the formalities of the insolvency, for example selling the assets and paying money to creditors.  Under Scottish insolvency law, insolvency practitioners are appointed to all formal insolvencies either by meetings of members and/or creditors, the directors or a creditor who has a charge on company assets.  In Scotland, an insolvency practitioner is usually appointed by the court when the ‘winding up’ order is made. They are called an ‘interim liquidator’ and within 28 days they will call a first creditors’ meeting to approve or appoint an alternative liquidator. A creditors’ meeting is an opportunity for creditors to approve the appointment of the chosen insolvency practitioner. You can use the first creditors’ meeting to propose that another insolvency practitioner should act (the appointment of the alternative insolvency practitioner will then be voted on at the meeting). If an Official Receiver has not passed a case to an insolvency practitioner, but you would like them to, ask the Official Receiver about the process to follow to do this.

In England and Wales, the insolvency practitioner or Official Receiver is appointed in different ways depending on the type of insolvency procedure:

  • Creditors’ voluntary liquidation (CVL):

A company goes into CVL if its members (shareholders) pass a resolution for its winding up.  The members nominate an insolvency practitioner to be liquidator.  Creditors are contacted and given the details of the nominated liquidator and asked for their decision on this appointment.  This process will probably take place using the deemed consent procedure.

During the CVL, if the liquidator needs to seek creditors’ approval to a particular matter, for example how the office holder is to be paid for his work, this may be done by correspondence, electronic voting or at a virtual meeting.

  • Administration:

The insolvency practitioner can be appointed by the company (shareholders) or its directors, the holder of a qualifying floating charge (often a bank or other financial institution) or by an application to court by one or more creditors, the company, the directors, a liquidator or the supervisor of the company voluntary arrangement.

Within eight weeks of the office holder’s appointment, proposals (a statement explaining what the administrator plans do do) are provided to creditors.   Creditors may be invited to agree to the proposals or amend them at a virtual creditors’ meeting or by using the correspondence decision procedure. If there is no money for unsecured creditors, the office holder does not need to seek approval from unsecured creditors to his proposals or fees.

The administrator must seek approval for his fees but this may not be needed from you if there is not going to be money to pay a dividend to you.  If you do have to approve the way in which the office holder is to be paid, this will probably be done at the same virtual meeting of creditors held to approve the proposals.

  • Company voluntary arrangement (CVA) and individual voluntary arrangements (IVA): 

An insolvency practitioner has to be appointed for a CVA or IVA to be approved.  Within a month of being appointed the office holder will write to creditors about the arrangement and invite creditors to approve the proposals.  It is likely that this decision will be made at a virtual meeting to allow you to make changes to the proposal.  

  • Compulsory liquidation, bankruptcies and debt relief orders: 

The Official Receiver automatically handles these procedures.  In compulsory liquidation and bankruptcy there is the possibility for creditors to appoint an insolvency practitioner of their choice but this requires either the majority of creditors by value; or 25% of creditors ask for a decision procedure to take place to replace the Official Receiver as liquidator or trustee.  

There are no meetings of creditors for debt relief orders or requirement to ask you for your agreement.

Approving the proposals for how the insolvency practitioner will be paid

R3 has produced guides for creditors on the fees charged by insolvency practitioners in the different insolvency procedures which are accessible here.

The fees charged by insolvency practitioners depend on the size of their firm, their location, their level of expertise, and the nature of the job at hand. 

An insolvency practitioner will make a proposal to the creditors that sets out how they are to be paid for their work.  Creditors (or committee if one has been formed in the procedure) will be consulted about this by a decision procedure. The office holder may be paid in either one or a mix of the following:

  • on the number of hours they spend working on a case (known as a ‘time-cost’ basis);
  • a ‘fixed-fee’ for their work;
  • as a percentage of the money which is realised, distributed or both.

Any combination of theses bases may be used to fix the fees and different things done by the office holder.  Where the fee is fixed as a percentage, different percentages may be used for different things done by the office holder.

Where fees are not based on time costs, before you agree to the basis of the office holder's fees, the office holder must give you certain information about the work the office holder proposes to undertake and the expenses that the office holder thinks may be incurred. If a fixed amount or percentage basis has been charged, the office holder must explain why the basis requested is expected to produce a fair and reasonable reflection of the work that the office holder anticipates will be undertaken.

Where the office holder proposes to charge fees on a time cost basis, it is important to understand that Insolvency practitioners’ firms have a standard set of hourly rates that they will seek to charge (a ‘charge-out’ rate). The rate is set to reflect the seniority, skills and experience of staff and possibly the complexity and risks of the appointment. These rates cover staff costs, overheads, and other expenditure the firm needs to recover. The ‘headline’ rate may be a starting point for creditors to negotiate with the insolvency practitioner.

If the insolvency practitioner is being paid by the hour, they will report to creditors about their activity throughout the case. You should bear in mind that the insolvency practitioner might not collect the full fee – it depends on how many assets are left in an insolvent company or individual’s possession. Insolvency practitioners in England and Wales must provide an upfront estimate of their fees if they are being paid by the hour.   This estimate must tell you what work and by whom the office holder proposes to undertake; the hourly rates proposed for each part of that work; estimate of the time needed to complete each part of the work; whether the office holder thinks it will be necessary to seek approval or further approval for the fees.  The office holder also needs to tell creditors if any of the work that the office holder could normally carry out is being subcontracted and provide creditors with an explanation of why it is being done.  The office holder can't draw fees in excess of the fee estimate provided without approval which needs to be given by the same body of creditors who approved the fees in the first instance.  The office holder must also provide that body with reasons for the increase or anticipated increase.

Official Receivers are set in statute (law) and are paid on a mix of bases. There is a general fee of £6,000 in all cases. Where the official receiver acts as as a liquidator and realises assets, the fees will be charged at 15% of assets realised. If the official receiver acting as liquidator realises sufficient assets to pay funds to creditors, it will be charged on a time and rate basis. 

If the creditors’ committee or the creditors can’t agree to the insolvency practitioner’s fees, the insolvency practitioner may apply to court for their fees proposal to be approved.

You can challenge the amount of the office holder’s fees if you think the fees drawn are excessive or if the basis is inappropriate. At least 10% in value of unsecured creditors will need to agree or you will need the court’s permission to challenge.  You have eight weeks from the date of the report in which the fees charged are set out to make the application to court.

In Scotland, if there is no creditors’ committee the fees will always be approved by application to the court, any approved fees can then be appealed by at least 25% of the creditors if they think that the approved fees are too high. 

Approve the formation of a committee

The office holder must tell you that you can form a creditors’ committee and will give advice on how to do this. 

Joining the liquidation/creditors’ committees or becoming a commissioner (the committee)

The office holder should advise creditors that they can form a committee to assist generally in discharging his or her duties as office holder and for a specific purpose, for example to take legal action to recover assets. The office holder will also provide creditors with an understanding of the role of the committee, on how committees are formed and guidance on what might be expected of a committee member. These committees may be called liquidation committees or creditors’ committees depending on the type of insolvency process, or in sequestration in Scotland, commissioners.

Why join a committee?

The committee is there to represent the creditors’ interests on an ongoing basis.  As a member of the committee you will be in a privileged position assisting the office holder with your knowledge of the company or individual and being actively involved in the insolvency process. This valuable insight may lead, in some cases, to enhanced outcomes, perhaps through information provided to help trace assets or by identifying behaviour that may give the Insolvency Service grounds to seek to disqualify directors from running a company.

What is the role of the committee?

The committee is principally there to give advice to the office holder and to consider how the office holder is to be paid from the assets of the insolvent estate.  The office holder should always take in to account the views of the committee although decisions are ultimately the responsibility of the office holder. In liquidations, some actions may need to be approved by the committee. 

Am I able to act as a member of the committee?

Any creditor who has an unsecured claim in the insolvency process may agree to act as a member of the committee. You will need to have provided details of your claim to the office holder and your unsecured claim must be agreed by the office holder for voting and dividend purposes.  You may not act if your claim has been rejected, if you are in a bankruptcy or have a conflict of interest.

The other creditors in the insolvency process approve the members of the committee.

Do I get paid?

No, the role is voluntary.  However, any travel expenses incurred will be treated as a cost of the insolvency in England and Wales (i.e. expenses will be paid out of the remaining assets of the insolvent company or individual after secured creditors receive what they are owed). These expenses cannot be recovered from a sequestration in Scotland.

I’m interested, when should I hear from the office holder about forming a committee?

In the first communication to you the office holder will invite creditors to say whether there is interest in forming a committee.  If there are enough creditors who would like to, the office holder will be in contact again asking creditors to vote on who should be on the committee. The committee is usually chosen at the first decision procedure, normally this is at the outset of the insolvency process. However even if it is decided at that point that no committee will be established, the office holder will ask creditors again whenever any decision procedure is being put to them. Depending on the type of insolvency, creditors may be invited to form a committee at pivotal stages during the procedure, for example, when an administrator presents proposals for the administration or in a bankruptcy or creditors voluntary liquidation, when approval is being sought to the basis of the office holder’s fees.

Further information about committees can be found here in R3’s Liquidation/Creditors’ Committees and Commissioners Guide for Creditors.

Keeping an eye on the office holder’s fees

I want to check the office holder’s fees are reasonable. How can I do this?

The insolvency practitioner will normally report to you annually (in some insolvency procedures such as administrations in England and Wales, every six months), detailing what funds have been collected, what debts they have been able to repay, and what costs, including the fees have been charged.

As mentioned earlier, the office holder may be paid in either one or a mix of the following:

  • on the number of hours they spend working on a case (known as a ‘time-cost’ basis);
  • a ‘fixed-fee’ for their work;
  • as a percentage of the money which is realised, distributed or both.

Any combination of theses bases may be used to fix the fees and different things done by the office holder.  Where the fee is fixed as a percentage, different percentages may be used for different things done by the office holder.

If a fixed amount or percentage basis has been charged, the office holder should have explained why the basis requested is expected to produce a fair and reasonable reflection of the work that the office holder anticipates will be undertaken.  You will be able to compare this with the actual fees that have been drawn or intended to be drawn.

If fees are being charged on a ‘time-cost’ basis, the insolvency practitioner will have provided an upfront estimate and will later report on:

  • what hourly fees have been charged;
  • what work has been carried out;
  • and the benefit of that work for creditors.
  • Insolvency practitioners will also detail the work for which they have charged that doesn’t directly benefit creditors but which, by law, is required.

An office holder may incur time costs which are more than the orginal fees' estimate provided to the body who was responsible for approving the basis of the fees.  It is important to note though that this doesn't mean that the office holder will be charging / drawing those fees from the estate.

If there is a creditors' committee, it is up to this committee to oversee the fees being charged by the insolvency practitioner.

If the insolvency practitioner wants to charge fees above those set out in the initial estimate, you will be asked permission to do so.

If, during the course of an insolvency and there is no creditors’ committee, you are unhappy with the fees being charged by an insolvency practitioner you may call a creditors’ meeting or go to court to challenge them (provided this is done by a combination of creditors owed 10% of the debtor’s debts or 25% of the debtors debts in a Scottish liquidation). You can also ask for further details of fees.

Further information on fees in the different insolvency procedures can be found here in R3’s creditors’ guides to fees.

Getting paid

When am I going to get any money back?

The office holder will report to creditors when money is available to be repaid to them. If there is money to distribute amongst creditors, secured creditors will be paid first and unsecured creditors last and only if there is enough money to go around.

Concerns over the conduct of the insolvency practitioner, the Official Receiver or the insolvency service

Unfortunately, you may have a reason to complain about the service you have received from an insolvency practitioner, Official Receiver or government agency dealing with the insolvency.

I want to complain. What do I do?

Complaints about Official Receivers or government agencies in charge of insolvency should be directed to the relevant government agency in England and Wales Insolvency (Insolvency Service), Scotland (Accountant in Bankruptcy) and Northern Ireland (Department for the Economy).

If you have a complaint about an insolvency practitioner, initially contact the office holder to discuss your concerns.  Often issues can be resolved quickly and your complaint satisfactorily dealt with.  However if you still have concerns and the insolvency practitioner operates in Scotland, England and Wales, you should use the Insolvency Service’s .  In relation to insolvency procedures that are governed by the law of Northern Ireland, complaints should be made directly to the authorising body of the insolvency practitioner concerned until 1 May 2018 when the Insolvency Service's Complaints Gateway should be used.  The complaints gateway is not a system for complaints about insolvency legislation or for matters of public policy.

Each insolvency practitioner must be licensed by one of six professional bodies:

Although you will make your complaint through the ‘Complaints Gateway’, the complaint will be handled by the relevant regulator.

You can find out which professional body regulates which insolvency practitioner using the Insolvency Service’s directory