Courts Given Power to Set Bankruptcy Trustee Fees

TDT | Manama

Email : editor@newsofbahrain.com

Courts in Bahrain have been handed firm authority to decide and revise how much bankruptcy trustees are paid, following the publication of a new order by the Minister of Justice, Islamic Affairs and Waqf.

Trustees are now required to put forward a proposed fee either when nominated or within 10 days of appointment.

The court will consider the request along with input from any creditors’ committee and may agree to it or ask for changes.

Figure

It can also raise or reduce the figure later, depending on how the case unfolds. The payment is to come out of the insolvent estate.

The court must weigh several factors in reaching a decision.

Assets

These include the size and nature of the debtor’s business, how involved or demanding the work was, what results were achieved in preserving or raising the value of assets, and how much time and effort went into the job.

If the trustee also helped draw up a reorganisation or liquidation plan, that too will be taken into account.

In cases where a trustee is asked to run the business themselves rather than the debtor, the court may grant them a monthly allowance for the time being.

Sum

Where the sum is paid out in stages, courts are to use a set of figures laid out in tables attached to the order — unless they choose otherwise.

If the estate is short of cash, payment can be held off until money becomes available.

Trustees may also be paid extra in cases where they have done more than what would reasonably be expected. This includes settling tangled claims, recovering funds or lost property, cutting costs, or arranging outside funding to help keep the business running.

Stakes

Anyone with a stake in the case — including trustees, creditors, or the debtor — may challenge the amount or the expenses set by the court, provided they act within thirty days.

Appeals may also be brought under the country’s insolvency law.

Trustees’ fees and related expenses are to be treated as administrative claims and take priority over all other unsecured debts. They must be paid out of whatever money the estate holds — or from the first takings if it holds nothing at the time.

Duties

Should the trustee be asked to carry out further duties after six months have passed since the reorganisation plan was agreed or since a final ruling on any appeal, the court is to assess the pay afresh using the same yardstick.

The decision was signed by Justice Minister Nawaf bin Mohammed Al Maawda and came into force the day after it appeared in the Official Gazette.