Liquidator remuneration in insolvency proceedings often raises difficult questions; especially in large corporate collapses where the work is extensive and the stakes are high. Courts must balance fair compensation with creditor protection, but approaches to fee assessment have varied across jurisdictions, leading to uncertainty and dispute.
Against this backdrop, the UK's Privy Council has delivered a landmark judgment clarifying the principles for assessing the fees of liquidators in complex, large-scale insolvencies. The decision in Attorney General of Trinidad and Tobago v CL Financial Ltd (in Liquidation) [2025] UKPC 41 provides crucial guidance for insolvency practitioners, creditors, and company directors, emphasising the need for detailed justification of time-based remuneration while stopping short of requiring a burdensome line by line court analysis.
This article summarises the key principles and their practical implications for stakeholders.
Background of the dispute
The case concerned the colossal and complex liquidation of CL Financial Ltd (CLF), a holding company with dozens of subsidiaries across multiple sectors and jurisdictions. Following a government bailout exceeding TT$23 billion, CLF was wound up in 2017. The court-appointed liquidators from Grant Thornton were remunerated based on "reasonable time expended" at pre-approved hourly rates for different staff grades.
When the liquidators sought court approval for their fees of approximately US$3.2 million for the 2019 calendar year, the Government of Trinidad and Tobago, as the company's largest creditor, objected. The Government argued that the liquidators had provided insufficient information to justify the sums claimed. The High Court of Trinidad and Tobago approved the fees, but this was overturned by the Court of Appeal, which suggested a rigorous, line by line examination was necessary. The case then proceeded to the Privy Council.
The core principles: finding the right level of detail
The Privy Council undertook an extensive review of insolvency law across the Commonwealth, including in the UK, Australia, New Zealand, and Singapore, to establish a common and principled approach. It ultimately found a middle ground, rejecting both the liquidators' overly general reporting and the Court of Appeal's call for a disproportionately detailed line by line analysis.
The key principles established by the Board are as follows:
- The burden of proof is on the liquidator: Liquidators are fiduciaries and officers of the court. They do not have an automatic right to remuneration. The onus is firmly on them to justify their fees and demonstrate that the work performed was both reasonable and necessary. Any doubt will be resolved against the liquidator.
- More than just hours worked: It is not enough for liquidators to simply state the number of hours worked and multiply it by a pre-approved rate. They must prove that the time costs were reasonably incurred. This involves showing:
- The work was necessary and appropriate (e.g., fulfilling statutory duties, prudently pursuing asset recovery).
- The work was performed by staff of an appropriate seniority level (i.e., not using a senior partner for a junior's task).
- The work was done efficiently, taking a reasonable amount of time.
3. Sufficient information is essential: Liquidators must provide enough information to allow the court and creditors to make an informed judgment. The Board endorsed the standard set in the English case of Mirror Group Newspapers plc v Maxwell (No 2) [1998] 1 BCLC 638, requiring liquidators to (i) explain the nature of each main task or category of task undertaken; (ii) Outline the reasons for embarking upon and persevering with each task, and (iii) link the time spent to each specific task or category, showing who (by grade/seniority) did the work.
4. Proportionality is key: The level of detail required is proportional to the case's complexity. Contrary to the High Court's initial view, a large, complex liquidation demands more detailed justification, not less, to enable proper scrutiny. However, this does not extend to providing "details of every phone call or email."
5. No line by line analysis: The court's role is not to conduct a minute, line-by-line taxation of the liquidator's timesheets. Such an approach would be impractical, costly, and would bog down the courts. Instead, the court should take a broader view, assessing the reasonableness of the work based on the categorised information provided.
The Singaporean model: a practical framework
The position in Singapore, as highlighted by the UK Privy Council, offers a structured and pragmatic framework that was commended as good practice. The Singapore High Court in Re Econ Corp Ltd (in provisional liquidation) (No 2) [2004] SGHC 49 established that liquidators should provide a synopsis of the work done, identifying the different tasks and the individuals who performed them, supported by a breakdown of time spent. Contemporaneous timesheets should also be available for verification if required.
Building on this, the later case of Kao Chai-Chau Linda v Fong Wai Lyn Carolyn [2015] SGHC 260 ("Linda Kao") was praised for its three-tiered approach to presenting information, which facilitates both a high-level ("macroscopic") and detailed ("microscopic") review. This includes:
- A top-level summary of total hours and costs for each team member.
- A mid-level breakdown by general work category, showing time spent per team member.
- A detailed analysis of individual tasks, describing their nature, complexity, and the specific time spent by each person.
Crucially, the UK Privy Council noted the Singaporean emphasis on proportionality, meaning the most granular level of detail is only required where the complexity of the task warrants it. This tiered model is praised for balancing the need for thorough justification with the practical costs of reporting.
The Singapore High Court in Linda Kao also introduced procedural safeguards which apply to all Court-appointed insolvency practitioners, aspects of which are now statutorily entrenched in Rules 172 and 173 of the Insolvency, Restructuring and Dissolution (Corporate Insolvency and Restructuring) Rules 2020.
Rules 172 and 173 require cost schedules to be submitted for approval if two of the following three conditions are satisfied: (i) the remuneration and expenses of the officeholder are estimated to exceed S$300,000; (ii) the amount of debt of the company is estimated by the officeholder to exceed S$20 million; and/or (iii) the securities of the company are listed on the Singapore Exchange. Rule 173(3) sets out a non-exhaustive list of information which an officeholder needs to include in a cost schedule.
Application to the CL Financial case
Applying these principles, the UK Privy Council found that the liquidators' remuneration report was "far from sufficient." The report described work in very general terms, grouped into broad work streams (e.g., "case management," "overseeing and assisting subsidiaries") without breaking down specific tasks, the time spent on them, or the seniority of the staff involved. This made it impossible for the Government or the court to assess whether the work was reasonably undertaken or efficiently performed.
The Board therefore dismissed the liquidators' appeal and remitted the matter back to the High Court, directing the liquidators to provide a fuller, more detailed analysis of their work to justify their claim.
Practical takeaways for clients
This judgment has significant practical implications:
- For Insolvency Practitioners: Meticulous, contemporaneous record-keeping is non-negotiable. Remuneration reports must go beyond high-level summaries. They should provide a clear narrative that connects tasks, justifications, time spent, and staff seniority in a transparent and logical manner.
- For Creditors: You have a right to examine and clarify a liquidator's fees. This decision empowers creditors by setting a clear standard for the information you are entitled to receive. If you believe fees are excessive or unjustified, you can request for more detailed breakdowns of work performed.
- For Directors of companies facing insolvency: Understand that the conduct and costs of a future liquidation will be subject to scrutiny. Ensuring good corporate records and governance beforehand can simplify the liquidator's tasks and potentially reduce the overall cost of the liquidation process.
Clarity, proportionality, and accountability
The Privy Council's decision reinforces the importance of clear, proportional, and well-documented justification for liquidator fees. By endorsing a structured approach, particularly the Singaporean model, it sets a practical benchmark for courts and practitioners alike. As insolvency cases grow in complexity, this guidance will be key to ensuring fair outcomes for creditors and transparency in the liquidation process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
