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Overview Legal Fees In Liquidation

The default position is that legal fees in Liquidation are subject to detailed assessment.

A Liquidator however can and more often than not will pay the legal fees of the insolvent estate’s own solicitors by way of agreement.

Liquidator Duty When Incurring Expenses In A Liquidation

When incurring expenses in a Liquidation a Liquidator has to consider the cost benefit assessment and apply commercial judgment. They are expected to spend the estate’s money as they might their own Mirror Group Newspapers plc v Maxwell and others (No 2) [1998] 1 BCLC 638 as Ferris J said:

Third, the test of whether office-holders have acted properly in undertaking particular tasks at a particular cost in expenses or time spent must be whether a reasonably prudent man, faced with the same circumstances in relation to his own affairs, would lay out or hazard his own money in doing what the office-holders have done. It is not sufficient, in my view, for office-holders to say that what they have done is within the scope of the duties or powers conferred upon them. They are expected to deploy commercial judgment, not to act regardless of expense. This is not to say that a transaction carried out at a high cost in relation to the benefit received, or even an expensive failure, will automatically result in the disallowance of expenses or remuneration. But it is to be expected that transactions having these characteristics will be subject to close scrutiny.

Default Detailed Assessment Provision

The default detailed assessment provisions set out in the Insolvency (England and Wales) Rules 2016 are as follows:

Hellas Telecommunications (Luxembourg) II SCA v Slaughter and May

The case of Hellas Telecommunications (Luxembourg) II SCA v Slaughter and May [2016] EWCA Civ 474 (“Hellas“) highlighted the matter further after Hellas Telecommunications (Luxembourg) II SCA (“the Company”) had gone into Administration and subsequently appointed Liquidators wanted to explore the detailed assessment of the fees of Slaughter and May (“Slaughter”) charged in the Administration of the Company.

In Hellas, the Court of Appeal said that whilst it might be possible for the Liquidators conceivably look to challenge the fees of Slaughter as misfeasance but they could not seek detailed assessment. There were a number of reasons but amongst other things, the fees of Slaughter had been already agreed:

I reject Mr Davies’ submission that the liquidators can fasten on to IR 7.34(3) (or indeed IR 7.34(2)) to seek a detailed assessment of the legal fees which administrators have agreed to pay. I add that I am not unhappy to reach that conclusion since it seems to me to be contrary to principle that the liquidators should be able to reopen contractual arrangements whether or not they have been properly made.

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Disclaimer: Legal Fees In Liquidation

This page Legal Fees In Liquidation is not legal advice and should not be relied upon as such. This article Legal Fees In Liquidation is provided for information purposes only. You can contact us on the specific facts of your case to obtain relevant advice via a Free Initial Consultation.

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