Government rejects call to limit insolvency firms' fees

Don't soak the liquidators

Minister for Employment Regulations Pat McFadden yesterday rejected calls to set controls on how much administrators can charge when a company goes into liquidation.

MP Gordon Banks called for the minister to set maximum limits and reduce fees charged by administrators and receivers handling company collapses. Fees are worked out according to time spent on the administration or as a percentage of assets realised by the process.

But McFadden rejected the call. He told the House that fees are agreed by the liquidation or creditors' committee or the creditors themselves if there is no such committee. That amount can then be reviewed by the court - because it is reviewed by the court, government ministers have no power to interfere.

McFadden said therefore he had no plans to limit or reduce fees charged.

While the point might seem rather arcane, with insolvenies likely to increase as the recession grinds on, creditors, particularly smaller suppliers, are likely to be aghast as they see the remaining assets of bust companies eaten up practitioners' fees

The question in Hansard is here. ®