A government announcement which means that insolvency practitioners (IPs) will have to provide all creditors with an upfront estimate of their fees for approval has been welcomed by the landlord community.
The British Property Federation (BPF) has praised the new regulations as a sensible way forward, and an important step in increasing transparency and clarity across the insolvency regime.
The new measures will act as a cap on fees as IPs will not be allowed to take fees in excess of the approved estimate unless creditors give further approval. This means that creditors, such as landlords, will have a much clearer picture of the total cost of IP fees, and how much they might expect to receive once the administration has been completed.
In a consultation on IP fees in 2014, the BPF suggested that giving creditors greater control over how fees are charged would mark an important step in revolutionising the fee structure and making the insolvency regime more transparent and fair.
“In the past, creditors have often felt like they are in the dark during the course of an administration, with no idea about how much fees will be and consequently how much compensation they will receive, so today’s announcement is very welcome.
“By agreeing fees in advance, creditors will be more aware of the complexity of the work undertaken, and also be reassured that this is accurately reflected.”