Principles Governing the Fixing of Insolvency Practitioners’ Remuneration

Abstract

Overcharging by insolvency practitioners is a problem which has invited legislative and judicial intervention in several commonwealth jurisdictions, and continues to be a concern in many of them. Such intervention is justified on the basis of market failure, as not all beneficiaries of the relevant insolvency procedure are able to effectively control and monitor the practitioner’s charges. However, the underlying principles of the regulations in this area are not always fully thought-out, and their application can often be challenging. The goal of this paper is to elucidate the principles that ought to apply in this area, evaluating the laws of 3 commonwealth jurisdictions – England, Singapore and Hong Kong – in the process. In particular, this paper will focus on who ought to be empowered to set remuneration, the rules on disclosure that combat market failure through the provision of information, and the appropriate approach towards calculating the quantum of remuneration. Hopefully, this paper will reveal the areas where further reform is desirable, and also render the underlying principles more logical.

Keywords: Insolvency practitioners; liquidators; IP remuneration; liquidators’ remuneration; market failure