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CS Professional · Insolvency and Bankruptcy - Law and Practice · Professional and Ethical Practices for Insolvency Practitioners

Rohan Desai, an insolvency professional, is appointed bankruptcy trustee for the estate of an individual debtor. He proposes to charge a flat amount fixed by him personally, unrelated to the estate's size. Under the Code, how should his fees be determined and paid?

The fees must be as specified and in proportion to the value of the bankrupt's estate, and they are paid out of the distribution of the estate in the manner provided in section 178. A trustee cannot fix a personal flat fee unrelated to the estate.

  1. AAs specified, in proportion to the value of the estate of the bankrupt, and paid from distribution of the estate in the manner provided in section 178Correct
  2. BAs any amount he agrees with the bankrupt, paid by the bankrupt directly
  3. CAs specified, but in proportion to the claims admitted from creditors, and paid by the creditors
  4. DAs a fixed amount set by the Adjudicating Authority, paid before any distribution of the estate

Explanation

Section 144 says the bankruptcy trustee charges such fees as may be specified, in proportion to the value of the estate of the bankrupt. They are paid from distribution of the estate in the manner provided in section 178. A self-fixed flat fee is therefore not permitted.

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