Where a creditors’ voluntary liquidation started off after 6 April 2010, certain people can request additional information from the liquidator on his remuneration and expenses over and above that which he provides in his reports. The purpose of the law at this stage is to enable the ‘interested party’ to assess the reasonableness of the liquidator’s costs.
Who can do this?
- An unsecured creditor may, whose own claim exceeds, or together with others whose claims exceed, 5% in value of the total unsecured creditors, may request further details of the liquidator’s remuneration and expenses. No court approval is needed, it’s merely a question of contacting the liquidator, in writing, and asking for reasonable information.
- An unsecured creditor, with the consent of the court, can request such information. In this case, there’s no deminimis percentage, the creditor does however have to persuade the court that it’s reasonable for him to askfor such information, and that his request is not just ‘frivolous’.
- A secured creditor can seek similar information. In this case, there’s no deminimis and court approval is not needed, the secured creditor just has to ask for reasonable information.
In each case, the request for information must be lodged with the liquidator within 21 days of the creditor’s receipt of the liquidator’s report to creditors. This is a strict deadline, if it is missed, the creditors lose their right to request information. The information sought can be on remuneration or expenses whether already drawn or proposed. It is interesting to note that the law does not enable members to seek additional information from the liquidator, this is because it is the creditors who have a real interest in the outcome of insolvent liquidations.
Challenging the remuneration or expenses after obtaining such information
Again, where the liquidation starts off after 6 April 2010, once the information referred to above has been obtained, certain creditors have the ability to apply to court to challenge the liquidator’s remuneration and expenses (again, as above, whether already drawn or proposed). That is to say, if one or more creditors are not happy with the basis of calculation of the liquidator’s remuneration, it can be challenged.
Who can do this?
- An unsecured creditor may, whose own claim exceeds, or together with others whose claims exceed, 10% in value of the total unsecured creditors.
- A secured creditor. There’s no deminimis level in this instance.
In each case, the application to court must be made within 8 weeks of the creditor’s receipt of the relevant report. Again, it is interesting to note that members do not have the ability to challenge the liquidator’s fees or expenses.
Midlands Business Recovery’s Policy
Here at Midlands Business Recovery we are committed to ensuring an honest and open dialogue with creditors. We are confident that our charges are reasonable but we do recognise that professional fees and expenses often cause creditors and others great concern.
We promise to listen to and deal properly with creditors’ requests for information where we believe they are made for perfectly proper reasons. We will provide information quickly (typically within 7 days, barring holiday periods) and of a standard that will enable creditors to make a proper assessment. We promise to be honest and open with creditors. In return we expect creditors to show us the same level of respect and courtesy.
We prefer to talk to creditors early, by telephone or face to face, if they have any concerns as we find that this can avoid difficulties caused by inadequate communication or a misunderstanding of each other’s position: we all live in an increasingly complex world where it is easy to jump to conclusions or go down blind alleys.
If you have any concerns about the fees or expenses of Midlands Business Recovery, please do not hesitate to call Paul Brindley on 0843 2896723, either to discuss your concerns there and then or to arrange a meeting. Or if you prefer, you can e-mail Paul at email@example.com.