From 21 July 2016, insolvency fees for bankruptcy and company insolvency are set to change. This is the outcome from the funding review the Insolvency Service has undertaken with the Department for Business, Innovation and Skills and HM Treasury and is to come into force in the shape of The Insolvency Proceedings (Fees) Order 2016 (SI 2016/692).
Interestingly, despite the fact that the funding consultation has been going on for a few years, other bodies and stakeholders (such as R3: Association of Business Recovery Professionals) have not been consulted in connection with the funding changes.
The aim of the new fees and deposits is to reflect the work the Official Receiver carries out and to move towards self funded Insolvency Service.
Where a petition is lodged with the Adjudicator or filed with the Court on or after 21 July 2016, you will be required to pay the increased deposit.
Where a bankruptcy order or compulsory winding up order is made on or after 21 July 2016, the new fee structure will apply.
The new fee structure is also set to introduce some new fees which will only be charged where the order was made on or after 21 July 2016.
There are a number of new fees being introduced on 21 July 2016:
The impact of these changes is difficult to call. The most controversial seems to be the replacement of the Secretary of State fee (which was dependent on the asset realisations and could have been anything up to £80,000) to a general fixed fee of £6,000, which is to be charged at the beginning, not at the end, ensuring the Official Receiver gets paid first.
Whilst it is expected that the number of insolvencies will not be affected, this may not be welcome news to those practitioners where there is a limited pot for creditors that gets eaten up by the fee increases. However, on the flip side, for those practitioners who regularly deal with asset rich insolvencies, this has the potential of being a huge saving.
Information correct as at date of publishing, more information available here.