Rule change means steeper bills for insolvency creditors
North East creditors of insolvent businesses and individuals face a dramatic hike in government insolvency fees, the North East chairman of insolvency trade body R3 has warned.
Neil Harrold said the had introduced a £6,000 fee in every compulsory liquidation or bankruptcy, even when the case is handled by a private sector insolvency practitioner rather than the government’s Official Receiver.
A further fee of 15 per cent of all realisations will apply in all Official Receiver-run cases, with the government estimating the new fees will cost creditors a total of almost £8million per year.
Neil, a partner with Hay & Kilner Solicitors, said: “The Government’s new insolvency fees are a very bad deal for North East creditors and will hit the very people that the insolvency regime is designed to try to support.
“The Government is putting creditors at risk of seeing fewer returns, and is asking them to pay more for the pleasure.
“The additional £6,000 charge for every case, even in the simplest situations where the government does nothing, is essentially a tax on creditors who have already lost money,” he added.
“These new fees have been introduced without warning or consultation, and the Government is neither treating creditors fairly nor working to the same standards as insolvency practitioners.”
The Government has also changed its guidance on passing insolvency cases to licensed practitioners, allowing the Official Receiver to hold onto more cases, even if a majority of creditors seek an insolvency practitioner appointment.
“The profession understands the government needs to fund Official Receivers, but disenfranchising creditors, holding onto cases staff may not be qualified to handle, and forcing creditors to pay uncompetitive fees undermines the regime and will mean fewer returns,” said Neil.