___

___

___

___

Costs

You will be pleased to note that an administrators "costs" are controlled in several ways.

• Firstly the administrator is obliged by law to put forward a "proposal" for achieving the "purpose" of the administration. That proposal document must be sent to every creditor with an invitation to attend a creditors meeting to discuss the "proposal". The proposal document itself must set a basis upon which it is proposed that the administrators remuneration should be fixed.

• When the creditors review the proposal they can modify what the administrator requests in relation to his fees by voting at the creditors meeting. The vote would be to resolve to change the basis on which the administrators fees are to be calculated.

• In addition if such a creditors resolution to approve the basis of the administrators fees has been approved the administrator has a further hurdle to jump in cases where the realisations made are insufficient to make a payment to unsecured creditors. In such cases the secured creditors have to approve the fees (as it is they who are effectively paying the administrator).

• But if there are enough funds to pay secured creditors in full then the effect is that the administration costs fall on the preferential creditors. If this circumstance arises the preferential creditors vote on the administrators remuneration package.

The effect of all these rules is that the party who directly suffers the costs of the administration is also the party who decides on the administration remuneration.

"He who pays the Piper picks the tune."

or

"He who pays the administrator picks the remuneration package."