The law is constantly changing and the Bailoran team aim to keep our clients updated on topics that matter to them. A petition deposit is needed to initiate a bankruptcy or compulsory liquidation. This article will update you on how these deposits will increase.
Helpful Definitions
Bankruptcy – an insolvency procedure for individuals who can’t pay their debts.
Compulsory Liquidation – the process of winding-up a company by the court. By the end of this process, the company ceases to exist.
Official Receivers – amongst various roles, they primarily administer and investigate the affairs of bankrupts, companies and partnerships wound up by the court.
For more insolvency terminology, please see the legal jargon buster article on our website https://bailoransolicitors.com/legal-jargon-buster-insolvency-terminology/
Petition Deposits
Up-front deposits are required when seeking an order for bankruptcy or compulsory liquidation. These partly fund each case.
The deposit contributes to the Official Receiver’s administration costs. The remainder of costs are recovered through fees charged against assets which are released during proceedings.
Deposits are returned to the initiating party where sufficient assets can recover all the costs
Increase in Deposits
Changes apply as of 1st November 2022. Fees for a creditor’s bankruptcy petition deposit will rise from £990 – £1,500. The fee for a company’s liquidation petition deposit will rise from £1,600 – £2,600. This is a stifling 51% and 62% increase.
Justification
Insolvency cases have fallen to a historically low level, with the majority having insufficient asset values to recover administrative costs.
As of July 2022, insolvency statistics highlighted that bankruptcies are 16% lower than in July 2021.
Deposits increased to ensure administration costs are covered. This enables the continuance of the Insolvency Service administering and investigating insolvencies effectively.
Law
Change, implemented through the Insolvency Proceedings (Fees) (Amendment) Order 2022, amends the Insolvency Proceedings (Fees) Order 2016.
Note: there will be no change to the adjudicator petition deposit where the individual applies for their own bankruptcy.
Bailoran MD John Bailes says insolvency matters can be overwhelming for businesses and individuals alike. The increase in fees may make organisations hesitant to instigate proceedings. We can help advise you about bankruptcy, compulsory liquidations, or any insolvency matters.
Plain English
At Bailoran, we avoid legal jargon. Misunderstanding documents or language prevents you from having the ability to exercise your rights or take responsibility for your obligations.
If you need help understanding any legal terminology or processes, our team of experts are ready to help.
This article does not contain legal advice. Should you require legal advice, please do not hesitate to contact our offices on 0113 266 0735 or at info@bailoransolicitors.com.