Administrator remuneration, estimates and increases

Administrators seeking to draw remuneration in excess of a fee estimate should seek approval under IR 18.30, not apply for remuneration to be increased under IR18.24 – IR18.28.

In this case, joint administrators obtained a fee resolution from creditors that they be remunerated on a time spent basis with fees “on account of costs to be approved at £235,000 plus VAT”. The initial report to creditors gave a fee estimate of £235,00, later increased to £400,315. The office holders confirmed when seeking approval for the payment on account they would not seek to draw further sums without approval. A restructuring plan was later sanctioned and the administrators then left office.  

The terms of the restructure plan include provisions relating to the office holders’ unpaid fees stating they were to be address under the Insolvency Rules. The former administrators (as they were by then) submitted a claim to the plan administrators for remuneration which exceeded the £235,000. When that was rejected, the former administrators applied under IR18.24 and 18.28 to have the balance of that claim approved.  

At first instance, the High Court did confirm IR 18.24 – 18.28 could apply to the remuneration of a former office holder but these provisions only permitted an application to be made to increase the amount of remuneration where it had been fixed at a set figure. In this case it was not because fees were fixed by reference to the time spent. That refusal was upheld on appeal, although the Court of Appeal took the view the application had actually been advanced under the wrong rule. Zacaroli LJ stated that where an fee estimate was given (as is now required), then under IR18.30 administrators may draw fees up to the level of the estimate but must seek approval to draw fees exceeding the estimate.

He also said that if creditors were told ahead of authorising a payment on account that no further remuneration would be drawn without approval (as in this case), that engaged the rule in Ex Parte James meaning further approval would be needed, even if IR18.30 did not strictly require it.

Jeremy Charles Frost & Anor v The Good Box Co Labs Limited & Ors [2025] EWCA Civ 252.

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