What Can You Do If Unhappy With An Insolvency Practitioner?
Unhappy With An Insolvency Practitioner is a post to highlight that no creditor needs to suffer in silence if they are unhappy with an insolvency practitioner.
The process of insolvency means that creditors are likely to be aggrieved for a whole range of reasons. However, there can be circumstances in which a creditor is sufficiently unhappy with an insolvency practitioner that they wish to do something about it and this post is a guide as to what can be done as follows:
In the event that you are dissatisfied and unhappy with an Insolvency Practitioner and their services, then in the first instance, you should contact them as soon as possible to see if they can and will try to resolve your complaint.
Letter or Email of Complaint
In order to assist with dealing with your complaint as quickly and efficiently as possible, your letter or email of complaint should include as much detail as possible and, in all cases, the following information:
- Your name and address;
- The full name of the insolvency case together with the Court name and number if applicable;
- Copies of any relevant correspondence and documents relating to the complaint;
- The name of the person or persons against whom your complaint is made;
- Full details of your complaint;
- An explanation of how you would like the Insolvency Practitioner to resolve your complaint.
The Insolvency Complaints Gateway
In the event that it is not possible for you to resolve your complaint with the Insolvency Practitioner, you can refer the complaint to The Insolvency Complaints Gateway, “www.gov.uk/complain-about-insolvency-practitioner”. The Insolvency Complaints Gateway will review the complaint and decide whether it is appropriate to refer the matter to the Insolvency Practitioner’s authorising body.
Please note that the Insolvency Service, the body responsible for running the Insolvency Complaints Gateway, encourages a complainant, in the first instance, to attempt to resolve any complaints via the internal complaints process of the Insolvency Practitioner’s firm in respect of which the complaint is being made.
Contact Details for The Insolvency Complaints Gateway
If you have difficulty accessing the online complaints form you can also make your complaint through the Insolvency Service Enquiry Line – email [email protected] or telephone: 0300 678 0015 and you will be taken through the same questions over the phone. You can post a complaint to IP Complaints, 3rd Floor, 1 City Walk, Leeds, LS11 9DA.
Unhappy With An Insolvency Practitioner And Want to Replace Them?
If however, your grievance goes further and you have not successfully resolved your complaints to your reasonable satisfaction you may wish to consider replacing the Insolvency Practitioner with another practitioner of your choice.
How Can You Replace an Insolvency Practitioner?
How can you replace an insolvency practitioner that you are unhappy with? There are two ways of doing this:
- An Application to Court
- Requisitioning a Decision Procedure
Court Application to Remove the Insolvency Practitioner
Application to Court requires what is referred to as ‘just cause’. Removal of an Insolvency Practitioner is not intended to be a procedure capable of being deployed by creditors if they just fancy a changing of the guard or they have fallen out with the Insolvency Practitioner for reasons unrelated to the conduct in the administration of the insolvency.
It would be very expensive if Insolvency Practitioners were replaced on a routine basis. Imagine the duplication of effort alone that could be required and such costs would be at the expense of all creditors.
Consequently if creditors want to remove the Insolvency Practitioner then they have to have good reason. But what is good reason?
What is a Good Reason?
Good reason or just cause will depend upon the facts of the case. The burden will be on the creditor applicant to show why the Insolvency Practitioner ought to be removed.
In general terms the Court will expect the Insolvency Practitioner to have been efficient, vigorous and unbiased; if not the Court may exercise its discretion to grant removal. However, an effective and honest Insolvency Practitioner will usually not be removed. Misconduct itself is not a requirement for an application for removal to succeed.
Requisition a Decision Procedure of Creditors
Decision Procedures have now in effect largely replaced meetings of creditors. Nowadays instead of encouraging attendance at physical meetings, important decisions can be taken by virtual meetings which are held remotely or they can be undertaken by voting through correspondence.
If you amount to or have the support of 25% or more of all creditors by value, then you can requisition a Decision Procedure to remove and replace an Insolvency Practitioner with another Insolvency Practitioner of your choice. You may have to pay a deposit to do this to cover costs but you can then seek to vote for this cost to be an expense of the insolvency and thereby seek to have it refunded.
There is another procedure known as Deemed Consent but it is not capable of being used to remove or replace an Insolvency Practitioner from office.
Challenging the Fees and Expenses of an Insolvency Practitioner
If you are unhappy with an Insolvency Practitioner and the fees and expenses charged, creditors have the right to challenge them.
How Can I Challenge the Fees and Expenses of an Insolvency Practitioner?
A creditor can challenge the fees of an Insolvency Practitioner within 21 days of the receipt of a progress report (secured creditor or an unsecured creditor with concurrence of at least 5% in value of the unsecured creditors or any unsecured creditor with the permission of the court) may request further information from me regarding my remuneration and expenses which have been detailed in a progress report.
Any creditor (secured creditor or an unsecured creditor with concurrence of at least 10% in value of the unsecured creditors or any unsecured creditor with the permission of the court) may within 8 weeks of receipt of progress report have a right to challenge my remuneration and expenses via application to Court on the grounds that the remuneration charged or the expenses incurred by me as set out in such a report are, in all the circumstances, excessive or, the basis fixed for remuneration is inappropriate.
A full explanation of these creditor rights can be found at the link to creditor rights in insolvency.
A creditors committee is a way that creditors can have a greater involvement and say in the way that an Insolvency Practitioner administers a case.
What is a Creditors Committee?
A creditors committee is not intended purely for creditors unhappy with an Insolvency Practitioner. It is however a way for creditors to have greater engagement in the running of an insolvency case by an Insolvency Practitioner.
Creditors who agree to serve on a creditors committee represent the creditors as a whole.
If a creditors committee is formed it can control the remuneration of the Insolvency Practitioner and be involved in decisions taken.
Requirements for a Creditors Committee
A Creditors Committee may be formed if a minimum of 3 and a maximum of 5 creditors are willing to become members of the same.
Nominations can only be accepted for a creditor to become a member of the Committee if they are an unsecured creditor and have lodged a proof of their debt that has not been disallowed for voting and dividend purposes.
A creditor who serves on a Creditors Committee will not be permitted to be remunerated by the Insolvency Practitioner but they can claim their legitimate travel expenses. Such expenses can be paid by the insolvency when incurred in connection with attendance at creditors committee meetings.
Excessive Remuneration and Expenses
Creditors’ rights – Rules 18.9 and 18.34 of the Insolvency (England & Wales) Rules 2016 – Rule 18.34
Creditors Rights in Insolvency – Remuneration and expenses: application to court by a creditor or member on grounds that remuneration or expenses are excessive
(a) the remuneration charged by the office-holder is in all the circumstances excessive;
(b) the basis fixed for the office-holder’s remuneration under rules 18.16, 18.18, 18.19, 18.20 and 18.21 (as applicable) is inappropriate; or
(c) the expenses incurred by the office-holder are in all the circumstances excessive.
(2) The following may make such an application for one or more of the orders set out in rule 18.36 or 18.37 as applicable-
(a) a secured creditor,
(b) an unsecured creditor with either-
(i) the concurrence of at least 10% in value of the unsecured creditors (including that creditor), or
(ii) the permission of the court, or
(c) in a members’ voluntary winding up-
(i) members of the company with at least 10% of the total voting rights of all the members having the right to vote at general meetings of the company, or
(ii) a member of the company with the permission of the court.
(3) The application by a creditor or member must be made no later than eight weeks after receipt by the applicant of the progress report under rule 18.3, or final report or account under rule 18.14 which first reports the charging of the remuneration or the incurring of the expenses in question (“the relevant report”).
Creditors’ rights – Rules 18.9 and 18.34 of the Insolvency (England & Wales) Rules 2016 Insolvency (England & Wales) – Rule 18.9
(1) The following may make a written request to the office-holder for further information about remuneration or expenses (other than pre-administration costs in an administration) set out in a progress report under rule 18.4(1)(b), (c) or (d) or a final report under rule 18.14-
(a) a secured creditor;
(b) an unsecured creditor with the concurrence of at least 5% in value of the unsecured creditors (including the creditor in question);
(c) members of the company in a members’ voluntary winding up with at least 5% of the total voting rights of all the members having the right to vote at general meetings of the company;
(d) any unsecured creditor with the permission of the court; or
(e) any member of the company in a members’ voluntary winding up with the permission of the court.
(2) A request, or an application to the court for permission, by such a person or persons must be made or filed with the court (as applicable) within 21 days of receipt of the report by the person, or by the last of them in the case of an application by more than one member or creditor.
(3) The office-holder must, within 14 days of receipt of such a request respond to the person or persons who requested the information by-
(a) providing all of the information requested;
(b) providing some of the information requested; or
(c) declining to provide the information requested.
(4) The office-holder may respond by providing only some of the information requested or decline to provide the information if-
(a) the time or cost of preparation of the information would be excessive; or
(b) disclosure of the information would be prejudicial to the conduct of the proceedings;
(c) disclosure of the information might reasonably be expected to lead to violence against any person; or
(d) the office-holder is subject to an obligation of confidentiality in relation to the information.
(5) An office-holder who does not provide all the information or declines to provide the information must inform the person or persons who requested the information of the reasons for so doing.
(6) A creditor, and a member of the company in a members’ voluntary winding up, who need not be the same as the creditor or members who requested the information, may apply to the court within 21 days of-
(a) the office-holder giving reasons for not providing all of the information requested;
(b) the expiry of the 14 days within which an office-holder must respond to a request.
(7) The court may make such order as it thinks just on an application under paragraph (6).
Disclaimer: This post Unhappy With An Insolvency Practitioner is not legal advice and no liability is accepted for any reliance placed upon the same.