We are aware of some of the potential pitfalls and perceived difficulties of fee approvals in Scottish administrations, specifically adhering to the timescales set out in the Rules in relation to accounting periods.
The Rules and their requirements in relation to the submission of a request for remuneration and the interaction of the progress report with the period of approval are set out below. Members who know in advance that the timescales cannot be achieved may seek the advance permission of the court to vary the deadlines. Members should not expect to rely on the courts taking a flexible approach to their interpretation of the Rules or that any breach will be remedied retrospectively.
The Insolvency (Scotland) (Company Voluntary Arrangements and Administration) Rules 2018 set out the requirements for the approval of the office holder’s remuneration in Scottish Administration procedures.
R3.95 (1) requires the request for approval of remuneration to be submitted to the approving party within two weeks after the end of the relevant accounting period. The six-week period referenced in R3.96 (1) is the period within which approval of the fee must be made and is the equivalent six-week period in which the Administrator’s progress report must be issued, as set out in R3.93.
Administrators who make their fee request in conjunction with issuing the progress report within two weeks of the end of the accounting period are therefore acting within the Rules. However, if the Administrator issues their fee request after the two week period, albeit with the progress report and within the six weeks period, their progress report meets the statutory deadline but not the fee request, and they are in breach of the Rules.
The progress report therefore has two functions:
It can support the request for fees made in the two-week period – in which case, a separate notice of the fee approved and any rights of appeal must be issued once fees have been approved.
OR
The fee request is made in the two-week period (providing the information required under R3.95), and the progress report is then issued with notice of the fees approved and any rights of appeal within the six-week period.