On Monday 9th August, Insolvency Guru Malcolm Niekirk held one of his free Coffee Break Briefing Webinars. In the presentation, Malcolm discussed the relationship between your proposals, the basis for your remuneration, and the role of the committee.
This is the summary article following the briefing.
The basic principles
It is for creditors to approve the basis for your fees. There are three bases:
- Time Costs
- Ad valorem
- Fixed Fees
You can ask for any one of these, or a combination.
The principles behind the law are:
- The creditors who are most affected by it are those who make the decision about the basis of your fees.
- Creditors may delegate that to a committee.
- Creditors also have the job of approving the strategy for the administration (as set out in your proposals).
- If you’re going for the ‘time costs’ basis for your remuneration, then your fees will be capped by your own estimate.
What is the relationship between proposals, remunerations and the committee?
In the full article, Malcolm provides a diagram demonstrating the relationship. This can be viewed here.
Timetables and post-appointment
There are three key decisions that you have to put to the creditors following your appointment. These are on:
- Proposals. These need:
- Active approval (by deemed consent, or a decision procedure); or
- Deemed approval (if it’s a paragraph 52paragraph 52(1) administration)
- Committee. The creditors are asked:
- Decision to form a committee
- And if so, who is to sit on it
- Remuneration, to confirm:
- Basis
- Fee estimate (if time costs)
The ‘proposals’ and ‘committee’ decisions can be by deemed consent; however, the ‘remuneration basis’ can only be decided by a decision procedure.
Proposals
The rules for the proposals are that:
- You have 8 weeks following the appointment to publish the proposals
- You have 10 weeks to seek approval of the proposals, which may be by deemed consent or a qualifying decision procedure (except from those cases where approval isn’t required, and the proposals can be deemed approved)
When does deemed approval apply?
The cases for which approval isn’t required and will be deemed, are those cases that are running on a paragraph 52(1) track. These are:
- paragraph 52(1)(a) – an administration where all creditors will be paid in full.
- paragraph 52(1)(b) – the unsecured creditors are getting nothing at all from the administration (except perhaps through the prescribed part)
- paragraph 52(1)(c) – the only possible statutory purpose is asset realisation for either:
- one or more secured creditors, or
- preferential creditors
This is a long and in depth article, which includes Malcolm's take on the committeem creditor classes, the different administration tracks and the approval procedure for the basis of remuneration.
The full article can be read here, or you can watch the presentation here.