From Tuesday 1st November 2022, the up-front payment needed to file a creditors’ bankruptcy petition or a company liquidation (winding-up) petition will increase.
The bankruptcy petition deposit will rise from £990 to £1,500, and the winding-up petition deposit will increase from £1,600 to £2,600.
This is the first change to fees since April 2016, with the Insolvency Service citing the drivers behind the increase as a “historically low level” of insolvency case numbers and “insufficient asset values to recover the administration costs” in the “majority” of other cases.
In announcing the fee rise, the Insolvency Service went on to say that “[t]he deposit increase will enable the Insolvency Service to continue to administer and investigate insolvencies effectively, maximising outcomes for creditors whilst mitigating the risk of cost recovery being passed on to the taxpayer.”
There will be no change to the deposit fee where an individual applies for their own bankruptcy.
According to the Insolvency Service, deposits go some way towards funding preliminary work undertaken by an Official Receiver on each case.
These increases are not insubstantial – around 50% for bankruptcy petitions and more than 60% for company winding-up petitions – and they are likely to lead to changes in the way that creditors assess their debt recovery options.
In particular, understanding the asset profile of a debtor – i.e. whether they own recoverable assets that can cover the value of the debt – will take on further importance, as will the value of the debt.
The debt thresholds for issuing petitions are relatively low. While petitions can be a useful tool in a creditor’s debt recovery strategy, those which develop into full insolvency proceedings bring various costs on top of the petition deposit. With the increased deposit, the total debt value needed to make insolvency proceedings worthwhile financially will increase also.
In view of the rising costs and clients not wanting to throw good money after bad, ESA Risk are often instructed to identify if the debtor or debtor company has any assets which the creditors will be able to make a recovery from. Depending upon the complexity of the matter, this may be a more cost-effective option than pushing a debtor into insolvency and winning a pyrrhic victory when there might be no assets.
When it comes to tracing assets, we are the experts. ESA Risk’s team will deliver concise but comprehensive results which will enable you to make the decision on which way to proceed. With a network of trusted partners covering every part of the world, our investigation capability – and therefore yours – is truly international.
To instruct us on an investigation or for more information on our asset tracing services, contact Mike Wright, Risk Management & Investigations Consultant at firstname.lastname@example.org, on +44 (0)843 515 8686 or via our contact form.
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