As reported in our recent e-update on the case of Echelon Wealth Management Limited (in liquidation), Lord Glennie has determined that liquidators who are removed from office have no right to retain assets as security for remuneration and costs. Lord Glennie then went on to consider how the court, in determining the level of a liquidator's remuneration, should view the conduct of the liquidator.
The decision continued - the question of remuneration
In the absence of a determination of remuneration by a liquidation committee, the court has a "general discretion to fix the remuneration payable to a liquidator". Lord Glennie held that the court may reflect, in the level of remuneration, any breach of duty by the liquidator.
Lord Glennie noted that the court may take guidance from any recommendations made by a reporter or auditor but that it was ultimately for the court to decide the level of remuneration and that, in exercising its discretion, the facts and circumstances of each case must of course be considered.
A matter of circumstance
The breach in this case was the withholding of a sum for security and Lord Glennie opined that an award of interest would be adequate compensation for such a breach. As the former liquidators had already returned the withheld sums, together with the interest thereon, it was felt inappropriate to reduce the remuneration.
In applying his decision to the breach of the former Echelon liquidators, Lord Glennie, however, considered that there was no reason for a sanction. Lord Glennie appears to have placed weight on the fact that the liquidators in Echelon were taking and following legal advice at all relevant times.
Comment
This case is interesting as it is one of the few authorities dealing with the impact of the conduct of liquidators on their entitlement to take remuneration. Although it was not considered appropriate in Echelon, it is clear that it is open for the court to reduce the remuneration of a liquidator as a result of their conduct.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
