Earlier this year, each of the three R3 SPG Technical Reviews was opened by John Cullen’s* fantastic presentation on the October fees rules and the draft revised SIP9.
The presentation generated many questions from delegates and a few controversial answers, which I’ve been bursting to recount here. Regrettably, work demands – and, tomorrow, my holiday – have frustrated my attempts to get blogging.
Thus, I’m being a bit cheeky, setting out here the questions… and leaving the answers for another day! I will try to get back here in a couple of weeks.
- When can/should a CVL Liquidator seek approval for his fees: (i) prior to being appointed by the shareholders; (ii) after the general meeting but before the S98 meeting (via a Centrebind); or (iii) after the S98 meeting?
- Would it be sufficient to provide a fees estimate to attendees of the S98 meeting? How else can an IP who takes the appointment from the floor of the S98 meeting deal with a fees resolution?
- What level of breakdown is needed to comply with the new rules’ requirement to provide the (time cost) fees estimate broken down by “each part of the work”? For example, is “asset realisation” sufficient, or does it need to be broken down into book debt collection, sale of business/assets, etc.?
- Given that the new rules require the (time cost) fees estimate to be broken down by “each part of the work”, does the IP need to revert to creditors if the time costs are exceeded for one part of the work, but the total estimate is not exceeded?
- Can a (time cost) fee estimate provide a range of likely costs or does it need to be a single figure? If the latter, how should IPs estimate, for example the costs of realising the interest in a bankrupt’s property, at an early stage of the case?
- What consequences does the expenses estimate have for the future administration of the case?
- Can an IP stop working on a case if creditors vote against an exceeding of the fees estimate?
The Draft Revised SIP9
My swift read-through of the draft revised SIP9 has prompted a few more questions in my mind:
- The draft revised SIP9 suggests time cost categories different from those of older SIP9s. How is this going to interact with firms’ time-recording systems and the administration of pre-October cases?
- If an IP were to change his time-recording system in the future, would he risk falling foul of SIP9’s requirement that he “should use a consistent format throughout the life of the case”?
- How will the SIP9’s blended rates work in practice?
- The draft new SIP9 is not amended as regards pre-appointment costs. Given that there had been suggestions in the past that this section may apply only to pre-administration costs, where does this leave treatment of pre-CVL and pre-VA costs?
- The draft new SIP9 is not amended as regards payments to associates, but continues to state that these should be approved “in the same manner as an office-holder’s remuneration or category 2 disbursements”. Does this mean that, where payments to associates are to be based on time costs, the estimate acts effectively as a cap so that the office-holder would need to seek creditors’ approval for any excess? As statute does not strictly require such approval to be sought, would an office-holder’s time costs incurred in reverting to creditors be justified? If an associate’s costs were treated instead as a category 2 disbursement, would this avoid the estimate acting as a cap?
* John Cullen is the ACCA’s representative on the JIC and an IP and partner of Menzies.