Approving fees: a guide for creditors
If a company is in financial difficulty, it can be put under the control of an independent external administrator.
This information sheet gives general information for creditors on the approval of an external administratorÃs fees in a liquidation of an insolvent company, voluntary administration or deed of company arrangement (other forms of external administration are not discussed in this information sheet). It outlines the rights that creditors have in the approval process.
Entitlement to fees and costs
A liquidator, voluntary administrator or deed administrator (i.e. an ëexternal administratorÃ) is entitled to be:
ïpaid reasonable
fees, or remuneration, for the work they perform, once these fees have been approved by a creditorsà committee, creditors or a court, and ïreimbursed for out-of-pocket
costs incurred in performing their role (these costs do not need creditorsà committee, creditor or court approval).
External administrators are only entitled to an amount of fees that is reasonable for the work that they and their staff properly perform in the external administration. What is reasonable will depend on the type of external administration and the issues that need to be resolved. Some are straightforward, while others are more complex.
External administrators must undertake some tasks that may not directly benefit creditors. These include reporting potential breaches of the law and lodging a detailed listing of receipts and payments with ASIC every six months. The external administrator is entitled to be paid for completing these statutory tasks.
For more on the tasks involved, see ASICÃs information sheets INFO 45
Liquidation: a guide for creditors and INFO 74 Voluntary administration: a guide for creditors.
Out-of-pocket costs that are commonly reimbursed include:
ï
legal feesï valuerÃs, real estate agentÃs and auctioneerÃs fees
ï stationery, photocopying, telephone and postage costs
ï retrieval costs for recovering the companyÃs computer records, and
ï storage costs for the companyÃs books and records.
Creditors have a direct interest in the level of fees and costs, as the external administrator will, generally, be paid from the companyÃs available assets before any payments to creditors. If there are not enough assets, the external administrator may have arranged for a third party to pay any shortfall. As a creditor, you should receive details of such an arrangement. If there are not enough assets to pay the fees and costs, and there is no third party payment arrangement, any shortfall is not paid.
Who may approve fees
Who may approve fees depends on the type of external administration: see Table 1. The external administrator must provide sufficient information to enable the relevant decision-making body to assess whether the fees are reasonable.
Table 1: Who may approve fees
|
Creditorsà committee †|
Creditors †|
Court †|
|||
|
Administrator in a voluntary administration †|
Answers + Solutions - FREE - 24/7 - The Insolvency Experts 1300 767 525 or contact us online now Latest News
Loading...
@StevenKugel
 Free Insolvency Video
Ph: 1300 767 525 | Add: Level 2, 56 Clarence St, Sydney NSW 2000 | Web Design by Quantum Web Solutions Call us for free advice 1300 767 525
 | ||||
CRS Warner Kugel trading as The Insolvency Experts © 2011. All rights reserved