Fair pay for fair work – registered liquidators’ claims for remuneration

Registered liquidators (RLs) perform a vital role in recovering company assets to maximise dividends to creditors of failed companies. They also help ASIC identify, act on and punish misconduct, and are entitled to be fairly paid for this important work.

RLs are usually paid from company assets unless another party has agreed to meet their costs, for example under an indemnity arrangement. If there are no funds available in the external administration, the RL does not get paid.

The Corporations Act 2001 states that RLs should be paid before unsecured creditors, reducing the funds available to pay dividends to creditors. Creditors have a primary role in approving RL remuneration – either at a meeting of creditors or by the statutory mechanism that permits a proposal to be passed by creditors without a meeting. However, if creditors do not approve remuneration, the RL may incur additional costs seeking court approval for remuneration, which also takes priority over creditors.

It is important that creditors actively participate in creditor meetings and remuneration approval processes. When creditors exercise their right to approve fair remuneration, they can positively influence how RLs claim remuneration and report to creditors. In turn, this will help build trust and confidence in the Australian insolvency regime.

This article outlines the RL’s entitlement to remuneration and provides practical tips to help creditors assess the reasonableness of the remuneration claimed.


Entitlement to remuneration

RLs are entitled to reasonable remuneration for necessary work that is properly performed, and must establish this entitlement accordingly.

The mere fact that work is done is not enough. It must be necessary work undertaken as part of the RL’s duties and functions. Further, reasonableness is not determined solely by the length of time spent performing tasks and the RL’s hourly rates.

Recent court decisions have confirmed that remuneration claimed should be proportional to the external administration, considering factors like:

  • - the quality and complexity of the work
  • - the value and nature of the asset or property dealt with
  • - the importance of the task and the context in which it is performed
  • - the benefit to be obtained from the work. 


For example, an RL claiming remuneration for $15,000 for asset realisations might appear high if the only asset is cash of $25,000 held in the company’s bank account. In this instance, creditors might need further information about these costs to assess whether the remuneration claimed is reasonable.

Although proportionality is a relevant consideration, an RL can claim remuneration for work they are required to carry out even though the work will not increase funds available in the administration. An example is the statutory duty to investigate and report potential breaches of the law to ASIC. This is something the RL must do regardless of the available funds. Further, an RL who acts reasonably in pursuing recoveries can be paid for this work even though they may ultimately fail in making any recoveries.

RLs are often hindered by poor or no company records, and the lack of cooperation by directors, company advisers and other parties. This can mean they must spend additional effort and time to do the most basic tasks. It is therefore even more important that the RL clearly explains why they performed certain tasks and workstreams (which are the major areas of work such as pursuing a particular legal action, large asset recovery actions, trading on, selling a business, etc), and why creditors (particularly those who are unfamiliar with these practical and legal difficulties) should approve the time taken on those tasks.

With this background, how then do you consider the reasonableness of the remuneration claimed?


Factors for you to consider when approving a claim for renumeration

RLs must provide creditors with a remuneration report before remuneration can be approved, either at a meeting or using the process to pass a proposal without a meeting. Note that remuneration can only be approved via a proposal without a meeting if the external administrator was appointed on or after 1 September 2017 – otherwise a meeting must be convened.

The remuneration report will usually be provided with the RL’s report to creditors, setting out the circumstances of the company and how the RL has dealt with it. Both the report to creditors and the remuneration report can be detailed and complex. Also, the remuneration claimed can sometimes appear large and often includes a claim for ‘future remuneration’, for work yet to be completed.

The report to creditors and the remuneration report need to be read together. They should explain:

  • - what work has been done
  • - what has been achieved
  • - the cost of that work
  • - the future milestones.


Standard remuneration reporting templates that simply list tasks performed and the RL’s hourly rates may not provide enough information to assess whether the tasks listed were necessary, properly performed, and that the remuneration claimed is reasonable.


Claims for future remuneration (even if the amount claimed is capped) raise concerns for creditors, particularly where the amount claimed is large and/or the claim is made early in an administration. The information sent to creditors should make it clear what work is to be performed and explain why it is appropriate for creditors to consider approving prospective remuneration.


When considering information in the report to creditors and the remuneration report, you might ask yourself:



Has the remuneration claim data been reviewed to ensure it is correct?

Before sending the remuneration report to creditors, has the RL said that they reviewed the work-in-progress entries to ensure they are only for necessary tasks, properly performed?

If not, why not?

If yes, has the RL confirmed they have written off all time recorded for tasks that were not necessary or not properly performed?

Do I have enough information to decide whether the remuneration claim is reasonable?

Does the report to creditors, or the remuneration report, provide enough information about the tasks performed and key workstreams (e.g. debt collection, other asset sales, recovery actions, breakdown of time investigating different aspects of the company’s affairs)?

Does the information provided allow you to assess:

  • why the work was performed?
  • whether it was necessary to undertake this work?
  • whether the time spent on those different workstreams was reasonable?

Was I provided with a generic template document?

If a template remuneration report is used, has it been tailored for the administration?

Are the tasks performed and workstreams consistent with other information provided by the RL about the company’s affairs and the work or investigations that needed to be performed?

If not, why has the RL claimed remuneration for these tasks?

Can I tell from the reports that all the work undertaken was necessary?

If the remuneration report includes tasks or workstreams that appear unnecessary (e.g. debt collection costs when the liquidator hasn’t reported any debts are owing to the company), why has the RL claimed remuneration for this work?

Does it appear that the work was done by staff at appropriate levels?

Was a large portion of work completed by very senior staff?

Did the tasks require senior staff expertise or could the work have been completed by junior staff at a lower cost?

Are the costs for each task or workstream reasonable?

Does the cost of work performed for each task or workstream appear reasonable given the nature and complexity of the work?

If not, what additional information do you need to assess reasonableness?

What about claims for time spent on investigations that may appear high?

If remuneration is claimed for investigations, is there enough information to satisfy you that the investigations have been conducted?

Has the result of these investigations been adequately reported to allow you to assess if the remuneration claimed appears reasonable? 

What are administration tasks?

Is there a significant amount of time allocated to administration?

If so, are the administrative tasks adequately explained? If not, what tasks does this include?

What is this claim for future remuneration?

If remuneration for future work is claimed, does the claim for future remuneration set out what work is to be performed and why, and the milestones that will be achieved?

Does the claim for future remuneration include a cap? If not, why not?

Have I already approved remuneration for the tasks claimed under future remuneration?

If remuneration is claimed for future work, have creditors already approved remuneration for this work?

If so, why is the liquidator requesting approval again?

Have they used the earlier approval to draw remuneration for other tasks?

Has remuneration been approved previously?

If yes, is the total remuneration claimed (including the amount now claimed) reasonable given the nature and size of the administration?

If the previous remuneration approval included approval for future remuneration:

  • have the tasks performed and the time spent been adequately explained? Has the work performed been reconciled against the tasks that were said to be performed under this previous approval?  If not, why not and what are the reasons for the difference?
  • has the current remuneration claim been reconciled with the previous future remuneration claim?  If not, why not?
  • does the information provided justify the claim for additional remuneration?
  • have the milestones given when the remuneration was approved been achieved?

If not, does the report explain why not?

It might be that changing circumstances have resulted in the RL undertaking other tasks and workstreams than those initially anticipated. If so, the reasons for this should be set out in the information the RL provides.


Importantly, if you need further information to assess whether the remuneration is reasonable, you have the statutory right to ask the RL to provide it before you decide whether to approve the remuneration. This might include information about:

  • - why tasks were performed
  • - why tasks continued to be performed after it had become apparent no future benefit would be achieved by continuing  with the work
  • - the cost of that work. 


You might request access to the work-in-progress report. This report should include details of who performed the tasks, the time taken, and explanations of what work was done.

You might also consider asking the RL to table your request for further information, and the RL’s response, at the creditors’ meeting (if that is where the remuneration claim will be determined).

If you are not satisfied with the information provided by the RL (including their response to your requests for further information), you can:

  • vote against the remuneration resolution at the meeting
  • respond by objecting to the proposal being passed without a creditors’ meeting being convened.

It is important that AICM members who are creditors, or act for them, actively participate in the remuneration approval process considering that an external administrator is entitled to fair pay for fair work. Exercising creditors’ rights to approve fair pay will promote best practice in remuneration claiming and reporting.



Remember, once approved, reasonable remuneration for necessary work that is properly performed by RLs is a priority payment from the assets of a company.

Before payment of this remuneration, creditors or the court must validly approve this remuneration. To approve remuneration, the RL must provide you, as creditors of the company in external administration, with the information you need to decide whether that remuneration is reasonable and necessary. Therefore, your feedback to RLs about the information you need will help them to provide the necessary information to all creditors, as well as to creditors in future administrations.

Remuneration in an external administration can have a significant impact on the funds available for distribution to creditors. We encourage you to attend creditor meetings or vote where there is a proposal for a resolution without a meeting where remuneration approval is sought. Only by actively participating can you influence the behaviour of RLs and have some control over the remuneration charged.


Thea Eszenyi
Senior Executive Leader, Insolvency
Practitioners, Australian Securities and
Investments Commission
Ph: 03 9280 4401, Mob: 0411 514 373
Email: thea.eszenyi@asic.gov.au


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