The most important thing about the liquidator fees
Do bankruptcy proceedings cost money?
With every bankruptcy procedure there are procedural costs that the debtor has to pay. This does not only include court costs. The bankruptcy administrator also receives fees and expenses. Before we proceed, we urge you to remember that not all debts can be erase with chapter 7 bankruptcy, click here to learn more about it.
On what basis is the remuneration of the bankruptcy administrator determined?
The basis of assessment for the remuneration of a bankruptcy administrator is the Bankruptcy Code and the Bankruptcy Law Remuneration Ordinance.
How much is the bankruptcy administrator’s fee?
The amount of the bankruptcy administrator fees mostly depends on the bankruptcy estate. In the case of a massless procedure, a minimum remuneration is estimated.
Costs for the bankruptcy administrator in the event of personal bankruptcy
Every consumer bankruptcy caused procedural costs for the debtor and his income and assets must pay. This does not only include court costs, which are based on the Court Costs Act. The bankruptcy administrator can also charge fees and expenses.
The bankruptcy administrator remuneration is regulated in the bankruptcy regulation and the bankruptcy law remuneration regulation. It consists of the following items:
- Standard rates, possibly surcharges or discounts
- Reasonable expenses
- Other costs
Incidentally, there is no way to negotiate with the bankruptcy administrator about his fees and to reach an agreement with him. Its remuneration is based solely on the legal provisions. Only the bankruptcy court may set the amount of its bankruptcy administrator fees. The administrator submits an application against the bankruptcy.
Payment from the bankruptcy administrator in mass private bankruptcy proceedings
“The bankruptcy administrator is entitled to remuneration for his management and reimbursement of reasonable expenses. The standard rate of remuneration is calculated based on the value of the bankruptcy estate at the time the bankruptcy proceedings were terminated. The extent and the difficulty of the management of the administrator is taken into account by the deviation from the standard rate.”
Accordingly, the liquidator fees are usually based on the bankruptcy estate. According to Section 35 I, this is the debtor’s assets that belong to him at the time the bankruptcy is opened and that he obtains during the proceedings. In accordance with Section 36, non-attachable items and non-attachable income are not taken into account.
First step: Graduated standard rate as well as surcharges and discounts
Let’s start with the remuneration for the liquidator. Their calculation is based on Section 2. The administrator can then initially apply a standard rate, the amount of which depends on the value of the bankruptcy estate at the time of the closing date. The regulation provides for graduated bankruptcy administrator fees, e.g.,
- 40 percent of the first $ 25,000 of the bankruptcy estate
- 25 percent of the excess up to $ 50,000 of the bankruptcy estate
- 7 percent of the excess up to $ 250,000 of the bankruptcy estate
Example 1: During the personal bankruptcy of the debtor, his assets are realized. The proceeds from this amount to $ 15,000. Added to this are $ 100 per month for a period of 24 months. This results in a mass of $ 17,400 at the final date. Because this amount is less than $ 25,000, is getting liquidator thereof 40 percent as liquidator fees, i.e.,$ 6,960.
Example 2: Assume that the bankruptcy estate achieved at the closing date is $ 30,000. Then the bankruptcy administrator fees are calculated from two differences: For the first $ 25,000 he receives 40 percent, i.e. $ 10,000. He can demand 25 percent of the further $ 5,000 (30,000 – 25,000), i.e. another $ 1,250. That makes a total of $ 11,250.
However, the bankruptcy estate is not the only yardstick by which the liquidator’s fees are determined during personal bankruptcy. If its work is more difficult or quite easy, the standard rate according to § 3 increases or decreases. Accordingly, a bankruptcy administrator can expect a lower payment, for example, if the bankruptcy proceedings are terminated prematurely.
Second step: determining the expenses
In addition to the regular bankruptcy administrator fees, the administrator can claim the expenses actually incurred or, alternatively, demand a flat rate. This flat rate is:
- 15 percent in the first year of bankruptcy
- Then 10 percent of the standard remuneration
- But no more than $ 250 per month or part thereof of his administrative activity
- However, the flat rate may not exceed 30 percent of the standard remuneration.
The bankruptcy court can instruct the bankruptcy administrator to serve documents. The bankruptcy administrator can also claim the expenses for this as fees. He can also levy sales tax on it.
Bankruptcy administrator: what fees can he levy in a massless personal bankruptcy?
Usually the remuneration is based on the bankruptcy estate. However, it can also happen that there is no bankruptcy estate at all. In this case, it is a so-called massless process. Nevertheless, the bankruptcy administrator receives remuneration, but in this case he can usually only demand a minimum fee.
This minimum remuneration from the bankruptcy administrator is regulated in § 2 II. These bankruptcy administrator fees are at least $ 1,000 for no more than 10 creditors. But provides a recognized debt advisor or a lawyer for bankruptcy law to file for bankruptcy and sufficient for this purpose all necessary equipment one, then this fee reduced to $ 800.
The minimum fee increases as follows as soon as more than ten creditors register their claims:
- 11 to 30 creditors: Increase by $ 150 for every five creditors or part thereof
- More than 30 creditors: Increase in the bankruptcy administrator fees by $ 100 for every five creditors commenced
The legislature expressly wants to enable those people who have no income whatsoever and are virtually penniless to be discharged from their residual debt by way of personal bankruptcy. The opening of consumer insolvency is, therefore, not tied to the condition that attachable income and assets are available.
What costs does the bankruptcy administrator usually cause for bankruptcy?
Even in regular bankruptcy, the bankruptcy administrator can charge fees and expenses. The same rules apply here as for remuneration during personal bankruptcy. In the case of an equivalent bankruptcy estate, administrators in consumer bankruptcy receive the same remuneration as administrators who are active in the context of corporate bankruptcy.
In a nutshell: The standard rates and, if applicable, the minimum remuneration also applies in standard bankruptcy proceedings. However, the standard rate may increase for certain reasons that do not apply to personal bankruptcy. Section 3 I names the following situations, for example:
- The bankruptcy administrator can demand higher fees if he continues the bankrupt company or if he manages several houses and the mass does not increase accordingly.
- The administrator has to deal with labor law issues such as bankruptcy payments for affected employees or protection against dismissal.
- The bankruptcy administrator works out abankruptcy plan for corporate restructuring.
Provisional bankruptcy administrator may also impose fees
Sometimes the bankruptcy court appoints a so-called preliminary bankruptcy administrator in the opening proceedings. Its main task is to secure the bankruptcy estate. When bankruptcy is opened, the provisional bankruptcy administrator often changes to the position of final administrator – in other words: it is one and the same person, only in different offices.
The preliminary bankruptcy administrator is also entitled to remuneration. This activity is to be paid for separately according to § 63 III. This regulation also defines the calculation of these bankruptcy administrator fees:
- The remuneration is initially 25 percent of the standard rate according to § 2 I.
- After determining this standard remuneration, discounts or surcharges may have to be taken into account.
In contrast to the final administrator, in the case of the provisional bankruptcy administrator, the basis of calculation is the debtor ‘s assets “to which his activity extends during the opening procedure”, Section 11 I.