Bankruptcy Petition Costs – Are they Recoverable?


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Bankruptcy petitions

A bankruptcy petition is a formal legal document filed by a debtor or one or more creditors to initiate the process of bankruptcy. The bankruptcy process in England and Wales is governed by the Insolvency Act 1986.

An individual or a creditor can file a bankruptcy petition with the court. Typically, individuals file their own bankruptcy petitions, while creditors file them to recover debts owed to them.

In England and Wales, the two main types of bankruptcy are:

  • Bankruptcy by Debtor’s Petition: The individual voluntarily petitions for their own bankruptcy, they will usually enter into an Individual Voluntary Arrangement (IVA).
  • Bankruptcy by Creditor’s Petition: Creditors file a petition to seek a court order for the debtor’s bankruptcy.

Once a bankruptcy petition is filed, it initiates court proceedings. The court reviews the petition, and if it is satisfied that the debtor is insolvent and meets the criteria for bankruptcy, it may issue a bankruptcy order.

Upon the issuance of a bankruptcy order, the Official Receiver is appointed to handle the initial stages of the bankruptcy. A trustee may also be appointed to manage the debtor’s assets and distribute funds to creditors.

Bankruptcy has significant legal consequences for the debtor, including the discharge of most debts and the potential sale of assets to satisfy creditors.

Bankruptcy petition costs

The legal costs involved in the bankruptcy process can vary depending on several factors. This may include the type of bankruptcy, whether it is initiated by the debtor or a creditor, and the complexity of the case. Listed below are some potential legal costs and fees associated with bankruptcy:

Court fees:

There are court fees associated with filing a bankruptcy petition. The amount can vary and is subject to change, so it’s important to check the current fee schedule. Debtors filing for bankruptcy may have to pay a deposit towards the costs.

Solicitor / Insolvency practitioner fees:

If an individual or business seeks legal advice and representation, they may need to hire a solicitor or an insolvency practitioner. The fees for legal representation can vary based on the complexity of the case and the services provided.

Official Receiver’s fees:

The Official Receiver is a government official who handles the initial stages of bankruptcy. The Official Receiver’s fees are typically covered by the government, but in some cases, the debtor may be required to contribute from their assets if there are sufficient funds.

Trustee’s fees:

If a trustee is appointed to manage the bankruptcy estate, their fees are generally paid from the assets of the debtor’s estate. These fees cover the costs of administering the bankruptcy, including asset realization and distribution to creditors.

Adjudicator’s fees:

In some cases, an adjudicator may be appointed to determine certain aspects of the bankruptcy proceedings. Adjudicator’s fees may be incurred as part of the process.


Are bankruptcy petition costs recoverable?

If a creditor is successful in presenting a petition for an individual’s bankruptcy, the court may order the debtor to pay the petitioner’s reasonable costs.

However, the recovery of costs is subject to the available funds in the bankruptcy estate. If there are insufficient funds to cover all costs, the petitioner may not fully recover their expenses.

If a party successfully challenges a bankruptcy petition, the court may order the petitioner to pay the debtor’s costs.

Again, the recovery of costs is subject to the availability of funds. If the debtor has incurred reasonable costs in defending against an unwarranted bankruptcy petition, the court may order the petitioner to cover those expenses.

In some cases, the court may not order the recovery of costs. This may happen if the petitioner’s actions are deemed unreasonable or if the bankruptcy petition is dismissed for lack of merit.


How can ARC Costs assist?

ARC Costs can assist will all aspects of claiming or defending bankruptcy petition costs.

ARC Costs are a team of independent and experienced Costs Draftsmen and Costs Lawyers who regularly assist you in the recovery/contention of costs.

Whether you are the Paying Party or the Receiving Party, we hold vast experience in dealing with costs matters on both sides.

We can assist in fixed recoverable costs cases and cases where costs are awarded on the standard basis, including the preparation/challenging of Bills of Costs, conducting of detailed assessment proceedings, and the preparation of Points of Dispute/Reply.

Should you require our assistance or have any further queries regarding costs, please contact us on 01204 397 302 or email one of the team at Alternatively, please complete our online enquiry form, and we will contact you to discuss your query or speak to our staff using the live chat function.

If you would like to issue or defend a bankruptcy petition, ARC Costs also maintain an extensive legal network of expert Solicitors in this area, and we would be happy to pass on your details to assist.

We may receive payments from third party solicitors on our panel to whom we may refer your claim. We will never charge you for any referrals made to our panel of third parties.


4 Bark Street East, Bolton, BL1 2BQ

01204 397302

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