[2025] EWHC 2674 (Ch)

Fecha: 17-Oct-2025

Part 18 of the 2016 Rules

Part 18 of the 2016 Rules

47.

Part 18 of the 2016 Rules concerns “reporting and remuneration of office-holders”. It imposes various duties on office-holders in administrations, windings-up (i.e. liquidators) and bankruptcy (trustee’s in bankruptcy).

48.

Before turning to the terms of Part 18, it is helpful to consider some other provisions of the Rules and the 1986 Act which are of assistance in interpreting it.

49.

First, the following provisions of Part 3, Chapter 10 addressing the expenses of the administration:

Rule 3.50 provides that “all fees, costs, charges and other expenses incurred in the course of the administration are to be treated as expenses of the administration” and that “the expenses associated with the prescribed part must be paid out of the prescribed part”. Rule 1.2 ascribes the same meaning to “prescribed part” as in s.176A(2)(a) of the 1986 Act. Its effect is that where there is a floating charge over a company’s assets, a “prescribed part” of the assets thus caught are to be made available to general creditors (that part being prescribed by delegated legislation (the Insolvency Act 1986 (Prescribed Part) Order 2003/2097)).

ii)

The terms of Rule 3.50 support the view that it is concerned with amounts being met from assets which form part of the administration (i.e. “the company’s pot”), with expenses concerning a sub-set of those assets (“the prescribed part”) being met from the prescribed part. Those provisions support the view that the focus of the 2016 Rules so far as administrator’s fees and expenses are concerned is from assets within the administrative process. i.e. free assets and floating charge assets.

iii)

Rule 3.51 sets out the priority order of expenses of the administration. The editors of Sealy & Millman: Annotated Guide to Insolvency Legislation 2025 observe in their commentary on this rule, “the priority rule does not apply to payment of expenses out of assets which do not form part of the company’s property but which, e.g. were forwarded to the company for an agreed specific purpose (such as payment of administrators’ remuneration).” It will be apparent that the example given (drawn from Re MKA Airlines Ltd (in liquidation) [2018] WHC 540 Ch)) ) is simply that, not an exhaustive statement of the position. Assets held subject to a fixed charge do not “form part of the company’s property”.

50.

Second, paragraph 99 of Schedule B1 to the 1986 Act addressing “the former administrator’s remuneration and expenses” (a provision, as was explained to me, of wider significance than might first appear to the uninitiated, on the basis that an administrator’s right to remuneration strictly arises at the end of the administration when they have become a “former administrator”, albeit the practical inconvenience of such an arrangement is mitigated by the facility of payments on account). Consistent with the asset-based focus of the broad structure of English insolvency law (see [17]-[22]) and the provisions considered in the preceding paragraph, paragraph 99(3) provides:

“The former administrator’s remuneration and expenses shall be-
(a)
charged on and payable out of property of which he had custody or control immediately before cessation; and
(b)
payable in priority to any security to which paragraph 70 applies.”

51.

Paragraph 70 grants to the administrator an equivalent power of sale in respect of assets subject to a floating charge as can be ordered by the Court under paragraph 71 in relation to fixed charge assets. The absence in paragraph 99(3) of any reference to paragraph 71 reflects the overriding point that the regulation of administrator remuneration under the Rules is not concerned with remuneration for realising assets subject to a fixed charge and paid from that source. Sealy and Milman state in their commentary on paragraph 99:

“Remuneration and expenses can be paid under para.99(3) only out of property that is beneficially owned by the company, and not property held by it on trust for others (except to the extent that remuneration and expenses are incurred in relation to trust property and for the benefit of trust beneficiaries)”

(citing Gillan v HEC Enterprises Ltd [2016] EWHC 3179 (Ch), where this point is made at [29]). That case considers the circumstances in which an administrator may come to assume the role of trustee in relation to trust assets held by the company, by orders made under the inherent jurisdiction of the court. The fixing of the administrator’s remuneration in such cases was not, so far as I have been able to ascertain, conducted under the Part 18 procedure but by the court (see for example Gillan, [117]).

52.

These provisions, together with the general structure of English insolvency law, evidence an important distinction so far as administrator remuneration is concerned between amounts paid from the company’s assets (as statutorily enlarged in relation to floating charge assets) and those held by the company beneficially for others (including, for this purpose, those held under fixed charges, any equity of redemption notwithstanding).

53.

This structure is replicated in the provisions addressing liquidators’ remuneration and expenses in a winding-up (Rule 7.108 in Part 6) and the trustee’s remuneration in bankruptcy (Rules 10.48 to 10.49 of Part 10). This is significant because Part 18 sets out a scheme applicable to all three classes of office-holder.

54.

In circumstances in which the 2016 Rules define where the remuneration and expenses of office-holders falling within their ambit are to be paid from, that provides a strong indication that the references to remuneration in Part 18 are concerned with remuneration from those sources. It would be rather surprising, and take clear language, if the Rules in Part 18 were to regulate the remuneration and expenses relating to the realising of assets which do not form part of the insolvency process and which the Rules do not identify as a source from which the relevant remuneration of the office-holder is to be paid.