Our Fee and Expense Recovery Policy

Our Fee Recovery Policy for creditors voluntary liquidations and administrations


In October 2015 changes were made in insolvency legislation such that now insolvency practitioners have to provide creditors and other interested parties with more openness and clarity as regards their fees. This page explains the policy of Midlands Business Recovery for providing such information in accordance with that new legislation.  Please note that the legislation only applies for cases started after 1 October 2015, the earlier legislation is somewhat different.

The new legislation enables a range of different fee bases to be applied to different appointments or indeed to different tasks within the same appointment. The fee basis, or any combination of the three allowed bases, is set for each liquidation/administration by the committee of the creditors, if there is one, or if there is none, by the creditors at a meeting, or if that is not possible, by the court.

Information about creditors’ rights can be found on the website of R3, a trade body for insolvency practitioners, at www.creditorinsolvencyguide.co.uk .  There you will also find a summary of how the liquidator’s/administrator’s fees may be approved -at Guides to fees. We will send you a hard copy by post or PDF copy by email, if you require. If writing in to ask for a copy, our address is Midlands Business Recovery, Alpha House, Tipton Street, Sedgley, West Midlands, DY3 1HE.  Alternatively send an email to paul@midlandsbusinessrecovery.co.uk

In all cases:

  • We will disclose sufficient information to enable you to understand how the proposed fees reflect the complexity (or otherwise) of the case, any responsibilities of an exceptional nature that will fall on us, the effectiveness with which we expect to carry out our functions, and the value and nature of the property with which we will have to deal – these are all aspects of the assignment which legislation says should be taken into account in setting the basis of the liquidator’s/administrator’s fees.
  • Once the basis of our fees have been agreed, an increase can only be approved later by those parties who initially set the basis of those fees. Ordinarily such an increase would probably only be allowed where there has been a ‘material and significant’ change in circumstances since fixing the original fee basis, say where a significant level of unexpected work became necessary.  If there should be no major change in circumstances, an increase can only be approved by the court on the application of the liquidator/administrator.
  • Once the basis of the liquidator’s/administrator’s fees has been agreed, all subsequent reports to any committee, to the creditors and to members must provide a breakdown of the fees drawn. If, as is normally the case with our appointments, approval was obtained on a ‘time costs’ basis, i.e. one which is calculated by reference to the actual time spent by the liquidator/administrator and our staff at their hourly charge-out rates, information as to the time spent will also be supplied. Reports will also explain how creditors can get further information from us to help them assess the level of time spent and fees drawn, and if not happy following receipt of that information, how they can then go on to challenge the fees drawn/time spent.  There is a strict time period for challenging such fees/time.  Once that time has expired, the law provides that those fees cannot be challenged.

We will now go on to discuss our policy as regards the 3 potential fees bases allowed in the legislation:

1       Time Costs Basis

Our fees on this basis are a simple calculation – the number of hours is multiplied by the then hourly charge out rate for each member of staff.

Time spent on assignments is recorded in six-minute units upon a specialist insolvency time recording system which includes supporting narrative to explain the work done.  In common with many other insolvency practitioners, we typically record, and the report, our work using the following categories:

  • Administration and planning
  • Realisation of assets
  • Creditors
  • Investigations
  • Trading

Depending on the nature of the assignment and work to be done, we might add other categories.

Our charge-out rates reflect the skills and experience of the member(s) of staff engaged on the assignment and the work that they carry out.   Our charge-out rates are reviewed annually on 1 January, and where considered appropriate we adjust them to take account inflation, changes in the firm’s overhead structure, and market conditions.

Time costs basis is the preferred basis we look to adopt at Midlands Business Recovery for all the work that we do.

Fees estimates

The law provides that when we are looking to get our fees approved on a time costs basis, we must provide a fees estimate before drawing any remuneration. When seeking approval for the basis of our fees, we will set out the work that we intend to undertake, the current hourly rates we intend to charge for that work, and the time that we think it will take. The information will be summarised in an average rate for all of the work being carried out within the estimate. We will also set out the principal assumptions on which we are making those estimates so that you can get an idea as to whether we might in due course need to seek further approval to exceed the estimate. We cannot draw fees in excess of that fee estimate without first getting further approval from those who approved the fees.

If later on we feel it necessary to ask to draw fees above the earlier estimate, we will explain why we have exceeded, or are likely to exceed, the estimate; we will explain any additional work we have done, or propose to do; we will set out the hourly rates for each part of the work and the time that the additional work is expected to take.

2       Percentage Basis

The new legislation allows liquidator’s/administrator’s fees to be set as a percentage of the realisations made by him, with different percentages applying to different assets, depending upon the complexity of realising the asset. In the event we were to request our fees be set on this basis (see note above regarding our preferred option), in our report making the request we will explain the assets, the percentage proposed, and the likely work covered by those fees, as well as the expenses that we expect to incur. It should be noted that expenses can be incurred without your approval, we are only disclosing them to help put the proposed fee basis into context.

The percentage approved will be charged against the relevant assets, and, where approval is obtained on a mixture of bases, any fixed fee (see below) or time costs will then be charged against the funds remaining in the liquidation after the realisation percentage has been deducted.
3       Fixed Fee

The new legislation allows the liquidator’s/administrator’s fees to be set at an agreed amount, with different set amounts possible for different tasks. In the event we were to request our fees be set on this basis (see note above regarding our preferred option), in our report making the request we will specify the set fee and the work covered by that set fee, together with the expenses that will be, or are likely to be, incurred.   Again, expenses can be incurred without your approval, we are only disclosing them to help put the proposed fee basis into context.

Other Costs

All other costs will be charged at the cost invoiced by the relevant agent, where ‘agent’ includes: Solicitors/legal advisors; Auctioneers/valuers; Accountants; Quantity surveyors; Estate agents; Other specialist advisors, such as pension advisors.

The legislation requires that the liquidator/administrator provides details of these expenses to be incurred, or likely to be incurred, when seeking fee approval. When later reporting to the committee or creditors during the course of the assignment, the actual expenses incurred will be compared with the original estimate provided.


Statement of Insolvency Practice number 9, some guidelines issued by insolvency practitioners’ governing bodies, splits disbursements into category 1 – those directly incurred on assignments for which the practitioner has a third party invoice – and category 2 expenses (typically expenses incurred by the practice and allocated across assignments or charges where the practitioner sets the price such a travelling costs).

We adopt a very simple policy concerning disbursements – we do not charge for category 2 disbursements; we charge only for category 1 disbursements, and at the exact cost to us.  Typical category 1 expenses that I incur are:

Statutory advertising Insolv/Visionblue case management system
Insolvency bonding Agents (see above)

Other types of formal insolvency

Please note that the new legislation set out in this policy does not apply to members’ voluntary liquidations, company voluntary arrangements) or individual voluntary arrangements, where completely different rules apply.