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Getting help

You can normally get help preparing the Statement of Affairs at no direct cost - it is paid for by the administrators or receivers.

This aspect of Insolvency law is covered by Rules 2.32 and 2.67 (of the Insolvency Rules 1986) for Administrations and Rule 3.7 for Administrative Receivers.

Extract from Rule 2.32 Expenses of statement of affairs

2.32(1) [Payment of Expenses] A relevant person making the statement of the company’s affairs or statement of concurrence shall be allowed, and paid by the administrator out of his receipts, any expenses incurred by the relevant person in so doing which the administrator considers reasonable.

Extracts from Rule 2.67

2.67(1) [Priority of expenses] The expenses of the administration are payable in the following order of priority-….

(d) any amount payable to a person employed or authorised under Chapter 5 of this Part of the Rules, to assts in the preparation of a statement of affairs or statement of concurrence;

Extract from Rule 3.7 Expenses of statement of affairs

3.7(1) [Payment of Expenses] A deponant making the statement of affairs and affidavit shall be allowed, and paid by the administrative reciever out of his receipts, any expenses incurred by the deponant in so doing which the receiver thinks reasonable.

Too good to be true? - check this out for yourself at the following government websites:

insolvency service website or http://www.opsi.gov.uk/si/si2003/20031730.htm

The Administrator or receiver may suggest a party to undertake the work in preparing the statement of affairs or may even do it themselves.  However the following points should be considered:

  • The party assisting should be independent –
    • the administrators may have a vested interest in showing a certain outcome, which could be detrimental to the party responsible for its contents or may simply be trying to protect their fees.  It is also unlikely, under regulatory body rules, that the administrator or their firm could act for you personally since it would pose an ethical conflict with the insolvency assignment.
    • The company’s auditors or accountants could have a vested interest as there could be claims against them, payments due, etc.
  • The party assisting should have relevant experience – it is a specialist area so should only be undertaken by someone with relevant accounting and insolvency knowledge.  Many small local accountants do not have this specialist knowledge.
  • Ensure that you get an engagement letter setting out the responsibilities of each parties.  This work is no different to any other kind of accountancy assignment – without some agreement in writing what happens if something goes wrong. 
  • Determine what output will be provided – often all the party will get is the statement of affairs without any working papers.  Documenting the rationale and assumptions used is very important so responsibility for this must be determined.
  • Question why a party is being recommended – are they truly independent from the Administrator/receiver and/or other parties?  Who recommended or introduced the Administrator/receiver?
  • Agree (in writing) what the Administrators would consider to be a reasonable fee for preparing the statement of affairs.  If not using the administrator’s recommended firm find this out before telling them that you plan to use another party – otherwise their answer may result in a lower than normal level which could result in a cost to you.  If the cost of preparing the SOA is more than the amount the administrators ‘consider reasonable’ then the party required to prepare the SOA can apply to court.  However this is costly and therefore if there will be a shortfall either accept this and treat any recovery as a bonus or reduce the scope of the assistance.

helping handThe cost of assisting with the preparation of a Statement of Affairs ranges from 2,500 upwards depending upon the size, complexity and involvement. It is not possible to generalise over the cost.

We can produce a professional and accurate Statement of Affairs at no direct cost to you - as outlined above the costs are met out of the estate's assets.  

As a firm of Chartered Accountants and Insolvency specialists we have extensive experience producing Statement of Affairs and the supporting documentation required.  Remember not all practices are the same - ensure you are clear what service you are getting.

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