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Receivership Fees in the UK

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When being bankrupt in the UK there are fees which need to be paid. The court appointed receivership fee is £450 which must be paid when filing for bankruptcy. But what many people don't understand is that there are also fees involved on the side of a creditor who seeks receivership of your company. It is one matter if you apply for bankruptcy, it is another matter altogether if a creditor petitions receivership.

Most often a creditor will have a receivership contract with a company or individual receiver who takes on the administrative role of receiver once the debtor is placed under receivership. Sometimes there is a fixed charge receivership contract that provides the best deal for creditors who expect to have ongoing dealings with that receiver or Receivership Company. In any event, make no mistake, the creditor signs the contract but the proceeds come out of liquidated assets of the company under receivership. What does this mean to the company?

Think in terms of the original debt. Take for example a company that owes £50,000. If the receiver's rate is a fixed rate, it might not be so hard on the business owner. There may still be something left after the sale of the assets and the administrative fee being paid to the receiver. Don't bank on that however as it is not often the case at all. On the other hand, what happens if the receiver charges a percentage of monies collected? There may be no way at all to pay outstanding debts as well as the receivership fees. These are the 'hidden costs' of a company going into receivership and one of the reasons why it should be avoided at all costs. Whether you are a company facing receivership or a creditor seeking the receivership services, understand that receivership fees do not come cheap.

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