What Is The Creditor Decision Deposit? Well, there are few instances in which creditors would need to requisition a Decision of an insolvent estate. The most likely instance would be if creditors wish to change the Insolvency Practitioner.
If the Insolvency Practitioner will not let another practitioner take over at the informal request of a creditor (and they would be under no obligation to do so), then a solution can either be a Court application for their removal if there was good reason for that approach or alternatively more commonly the creditor will formally requisition a Decision.
SUMMARY OF KEY FACTS
- A creditor can requisition a Decision in an insolvency case if they have the support of 25% or more of creditors by value; AND
- IF upon being notified the creditor is provided within 14 days with a breakdown of a request for a deposit from the Insolvency Practitioner, then they must pay it for the Decision to be held; BUT
- IF no deposit is sought within the 14 days then the Insolvency Practitioner must convene the Decision without it.
The Creditor Requisition Decision is the procedure that enables the creditor of an insolvent estate such as a Liquidation, Administration or Bankruptcy to compel the Insolvency Practitioner to hold a Decision Procedure.
The creditor’s right to requisition a Decision arises from Rule 15.18 of the Insolvency (England And Wales) Rules 2016.
In order to serve notice on the Insolvency Practitioner of their desire to requisition a Decision, the creditor will need to typically complete a Requisition of Decision Form.
If all the requirements of Rule 15.18 are met, it is possible for a creditor to serve such notices without the use of a form.
The requirements of the Creditors Decision Deposit are that if a Liquidator or Administrator or Trustee in Bankruptcy receives notice under Rule 15.18 of the Insolvency (England And Wales) Rules 2016 from a creditor who wishes to do the following:
One of the key requirements is the right for the Insolvency Practitioner to request and require that the creditor seeking the Decision pays a deposit as security for the costs of the process in light of Rule 15.19 of the Insolvency (England And Wales) Rules 2016.
A request for the Creditors Decision Deposit must be made by the Insolvency Practitioner within 14 days of being properly notified of the requisition request by the creditor. If the Insolvency Practitioner fails to send a breakdown of a request for such a deposit within that 14 day period then the Decision procedure must be held regardless.
The amount of the Creditors Decision Deposit is not a figure set in stone.
The figure is one that will be requested by the Insolvency Practitioner and can vary, depending for example only on:
- The volume of creditors.
- The potential disputes that might arise over the amount that each creditor is entitled to vote for.
- If the Decision is held by correspondence or by a remote virtual meeting or as a physical meeting.
- How many creditors attend any such meeting.
- If any meeting has to be adjourned for any reason.
- Legal issues that might arise as a result of the Decision procedure requisitioned by the creditor(s).
Our CEO, Elliot Green who is a Licensed Insolvency Practitioner, has experienced requests for deposits from other Practitioners ranging from £0 to £7,500.
Yes, you can challenge the amount of the deposit by a detailed review of the itemised breakdown to see if there are any estimated costs and expenses that might be capable of being reduced.
With such an approach you may be able to negotiate a reduction in the level of the deposit.
If there are sufficient asset realisations either now or in the future then you can seek a Decision of creditors for the costs of the requisitioned Decision to be paid out of the assets of the insolvency. In such an instance you may have the entire deposit returned to you.
If the actual costs of the Decision process are less than the Insolvency Practitioner’s breakdown provided, then any surplus should be refunded to the creditor.
Even if an Insolvency Practitioner has already obtained approval from creditors to draw fees by way of a valid fee resolution, that is a separate matter from the Creditor Decision Deposit. The Creditor Decision Deposit is NOT an asset of the insolvency process; it is the money of the creditor who has requisitioned the decision.
The Insolvency Practitioner, therefore, cannot rely upon the right to draw fees from the insolvent estate under a historic fee resolution to assume entitlement to any or all of the Creditor Decision Deposit.
The entitlement to offset the costs of the requisitioned Decision procedure from the Creditor Decision Deposit can be resolved either by agreement between the Insolvency Practitioner and the creditor or if necessary by reference to Court. In view of the sums involved, it would be normal for such matters to be resolved by way of agreement.
Yes, you will still need to pay the deposit to have the requisitioned Decision procedure held if a deposit has been requested within the 14 day period, even if you have a complaint about the Insolvency Practitioner.
What About A Complaint About Negligence Or Defective Work?
Yes, you will still need to pay the deposit to have the requisitioned Decision procedure held even if you have a complaint about the Insolvency Practitioner in relation to matters of alleged negligence or defective work.
The Decision procedure rules are set out in the legislation and they are unaffected by complaints.
If you have a complaint about an Insolvency Practitioner then there is a separate process operated by the Insolvency Service called Complain About An Insolvency Practitioner. You should however first complain to the Insolvency Practitioner’s firm in the first instance and go through their complaints process.
Are you a creditor of insolvency process?
If you are a creditor of an insolvent company or individual, Oliver Elliot can help you address your claim and concerns arising from the insolvency.
- What Is The Creditor Requisition Decision?
- Creditors Decision Requisition Form
- Creditors Decision Deposit Requirements
- How Much Is the Creditors Decision Deposit?
- Can You Challenge The Amount Of The Deposit?
- Will You Get The Deposit Back?
- Is The Creditor Deposit Fees Of The Practitioner?
- Do I Need To Pay Deposit If I Have A Complaint About The Insolvency Practitioner?
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Disclaimer: What Is The Creditor Decision Deposit?
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