Increase in the cost of creditor bankruptcy and liquidation petition deposits

The Insolvency Service has announced that the up-front petition deposit fee, paid by those initiating creditor bankruptcy and compulsory liquidation proceedings, will rise from 1 November 2022.

The Insolvency Service is making changes to the deposits paid to initiate creditor bankruptcies and compulsory liquidations following The Insolvency Proceedings (Fees) (Amendment) Order 2022.

The petition deposit is the amount that needs to be paid up-front to seek an order and is set to increase on all cases where a petition is filed at court on or after 1 November 2022.

However, it should be noted that there will be no change to the adjudicator petition deposit where an individual applies for their own bankruptcy.

A creditors’ bankruptcy petition deposit will rise from the current fee of £990 to £1,500 as of 1 November, while a company liquidation petition deposit will rise from the current fee of £1,600 to £2,600 from that date.

The deposit contributes to the Official Receiver’s administration costs, with the remainder of their costs recovered through fees charged against assets realised during the bankruptcy or liquidation proceedings.

However, if there are sufficient assets to recover all the fees and costs, then the deposit is returned to the party who initiated the insolvency.

Deposit fees have not changed since April 2016. Insolvency case numbers have fallen to a historically low level, so further justification for the increases is that the majority of the remaining cases have insufficient asset values to recover the administration costs.

The Insolvency Service explains that the deposit increase will enable it 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.

For help and advice on related matters, please contact our Insolvency Director and Appointment Taker, Richard Warwick, today.

Posted in Insolvency, News, Newswire.