Why There Is No Fixed Insolvency Practitioner Fee

Every insolvency case differs in size, complexity, and the amount of investigation required, so UK law does not set a single fixed fee for licensed insolvency practitioners. Instead, fees follow one of a few recognised structures, and understanding them helps you avoid unpleasant surprises before you commit to a formal process.

The Three Main Fee Structures

Time-cost basis

This is the most common approach, used in the majority of UK insolvency cases. The practitioner charges an hourly rate multiplied by the hours actually worked. Rates typically scale with seniority, from more junior administrators and assistants through to managers and senior partners who take on complex appointments.

Fixed fee

For more predictable, lower-complexity cases, such as a straightforward Creditors’ Voluntary Liquidation, practitioners often quote a fixed fee agreed in advance. This gives directors certainty, though it usually only covers work within an agreed scope, with anything beyond that billed separately.

Percentage of assets realised

In some cases, particularly those handled by the Official Receiver, fees are calculated as a percentage of the value the practitioner recovers for creditors, on top of a standard general fee.

What Influences the Cost

  • Case complexity. A simple, well-documented liquidation costs far less than one involving disputed assets, suspected misconduct, or cross-border elements.
  • The type of procedure. A Members’ Voluntary Liquidation for a straightforward solvent company tends to cost less than a contentious administration or a compulsory liquidation.
  • Investigation requirements. Liquidators have a statutory duty to investigate director conduct and any suspicious transactions before insolvency. The more digging this requires, the more time, and therefore fee, it consumes.
  • Who is paying. Fees are usually paid from the company’s own assets, not the director’s personal funds, though in cases with insufficient assets, this can become a genuine issue.

Typical Cost Ranges

Estimated, based on published industry figures and subject to change: a straightforward small business Creditors’ Voluntary Liquidation often involves 35 to 50 hours of practitioner time, which can translate to a total time-cost fee somewhere in the range of several thousand pounds up to the low tens of thousands, depending on hourly rates and complexity. Larger or more contentious cases, such as a formal administration, generally cost considerably more, since there is no fixed cap and fees reflect the actual time and complexity involved. Always request a written, case-specific estimate rather than relying on general figures, since every case genuinely differs.

Who Approves the Fees

Once a practitioner is formally appointed, their fees generally require approval, either from creditors, a creditors’ committee, or the court, depending on the type of case. Practitioners cannot simply set their own fee unilaterally once appointed. If fees have not been agreed before appointment, the practitioner must seek approval afterward, and creditors have a right to question or challenge fees they consider excessive.

What Happens if the Company Cannot Cover the Fee

In many insolvency procedures, the company’s own assets, including money owed to it, stock, and equipment, cover the practitioner’s fee before it is paid to the director personally. Directors are often surprised to learn they do not usually need to pay from personal funds. Where a company genuinely has insufficient assets, a director may be asked to contribute personally, though this depends heavily on the specific circumstances and the process chosen.

Questions to Ask Before You Appoint a Practitioner

  • Is the fee time-cost, fixed, or a mix of both?
  • What hourly rates apply at each level of seniority involved in my case?
  • What is included in a fixed fee, and what would trigger additional charges?
  • Who approves the fee, and how can I challenge it if I think it is unreasonable?
  • Will the fee come from company assets, or could I be personally liable for any shortfall?

Frequently Asked Questions

Do I pay an insolvency practitioner’s fee personally?

Usually no. Fees are typically paid from the company’s own assets as part of the insolvency process, not from a director’s personal funds, though exceptions exist where a company has very limited assets.

Can I negotiate an insolvency practitioner’s fee?

Often, yes, particularly for fixed-fee work such as a straightforward liquidation. Getting quotes from more than one licensed practitioner before appointment is a reasonable and common approach.

What happens if I think the fee charged is too high?

Creditors, and in some circumstances the company itself, can challenge fees through the approval process or, in serious disputes, through the court. Keep clear records of what was agreed and what was actually charged.

Are initial consultations with an insolvency practitioner free?

Most licensed practitioners offer a free, no-obligation initial consultation to discuss your situation before any formal fee arrangement begins.

Getting Advice

Understanding fees is only part of choosing the right process. Our guides to MVL vs CVL and administration vs liquidation explain which formal route might suit your company’s situation before you start comparing quotes.

This article gives general information only. It does not constitute legal or financial advice. Cost figures are estimated and will vary by case. Always request a written, case-specific fee estimate from a licensed insolvency practitioner.