Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION [2013] CSOH 4
	OPINION OF LORD MALCOLM in a Note by BLAIR CARNEGIE NIMMO Chartered Accountant of KPMG LLP, as liquidator of St Margaret's School, Edinburgh, Ltd Noter; for Approval of accounts of intromissions ________________

Noter: Sellar QC; Shepherd & Wedderburn LLP

11 January 2013

[1] The noter is the liquidator of St Margaret's School, Edinburgh, Ltd. On 10 June 2010, the court appointed him as provisional liquidator of the company. On 30 June 2010, he was appointed interim liquidator, and on 11 August 2010, at the first meeting of creditors, he was appointed liquidator. Liquidation and creditors' committees were formed.

[2] The noter has continued to perform his duties. He now asks the court to audit and approve his accounts, and to determine his claim for outlays and remuneration for the period of the provisional liquidation, namely 10-29 June 2010. The noter informed the liquidation committee in his report of 28 January 2010 that during the period 10-29 June 2010, 421 hours were spent by his firm's staff in respect of the provisional liquidation, resulting in a claim of £120,344.75, not including vat. Outlays were £1,030.08 plus vat.

[3] The sale of the company's properties was completed in August 2011. Since then the noter has repaid the amount owing to the bank in accordance with an outstanding security, and focused upon collecting the remaining debtor balances. The committee has approved his fees for the periods of interim and full liquidation, amounting to £502,659 (exclusive of vat). (Only the court can approve his fees and outlays for the provisional liquidation in June 2010.)

[4] In accordance with the court's usual practice, a remit was made to an accountant to examine and audit the account of the noter's intromissions as provisional liquidator, and to report as to what, in his opinion, would be suitable remuneration. The court also remitted to the auditor of court to report as to a suitable sum by way of the provisional liquidator's remuneration for the same 20 day period. They were appointed to confer before issuing their respective reports. The auditing accountant was selected from a list kept and maintained by the court of experienced insolvency practitioners in Scotland.

[5] In due course the accountant reported that the claimed fee of £120,344.75 should be allowed, to which vat at 20% would be added - giving a total of £144,413.70. In addition, disbursements of £1,047.28 should be paid from funds in hand. The auditor of court issued a brief report to the same effect.

[6] The court sought further information from the accountant. Some additional information and material was presented. However, given the large sum sought in respect of only a 20 day period, I decided to fix a hearing. It should be stressed that this did not involve any imputation as to the work carried out by the accountant and the auditor. In advance of that hearing, the court indicated that its concern as to the size of the proposed fee might be allayed by an explanation tendered on behalf of the noter; and that it would be helpful to gain a broader understanding of the progress of the liquidation, the recoveries, the debtors and the fees, etc approved to date, all to allow the provisional liquidation to be viewed in its wider context.

[7] The above is an outline of the procedure leading up to the hearing. It is convenient at this stage to provide greater detail as to that background.

The report by the auditing accountant

[8] I was informed that St Margaret's School in Edinburgh, which had charitable status, suffered from a falling pupil roll for a number of years, mirrored by a fall in fee income which led to a succession of trading losses. As the 2009/10 academic year progressed, it became clear to the governors that the school was no longer financially viable. They concluded that the only option was to close the school. A petition to the Court of Session was presented resulting in the noter's appointment as provisional liquidator. He was appointed three weeks before the end of the school year, once the exam season had finished. It was quickly concluded that, if at all possible, the school should continue to trade until the end of the academic year. The necessary co-operation and agreement of staff and key suppliers was secured to allow this brief but essential period of trading to take place. Both the school and the nursery closed on 29 June 2010.

[9] The reporter commented that this was a high profile and extremely sensitive appointment, requiring interaction with a large and diverse group of interested parties. The provisional liquidator had to deal with external media enquiries and various regulatory bodies. Liaison and communication with the teaching staff, pupils and parents demanded the involvement of the noter and other senior members of his team. This was extremely time consuming, but vital to ensure the smooth progression and running of the winding up process.

[10] In addition to supervising ongoing trading and liaising with key interests, the noter and his staff carried out a number of other important tasks during the period of provisional liquidation. These included the preparation of sales memoranda to facilitate the marketing of both the school and the nursery as going concerns; collating information in relation to other assets; liaising with the secured creditor, The Royal Bank of Scotland plc; dealing with correspondence and phone calls from a large number of unsecured creditors; and undertaking all statutory and compliance tasks.

[11] The balance of funds held at 29 June 2010 of £27,271.39 has been reconciled to an account held at the bank, and carried forward to the noter's account for the period of interim liquidation. The auditing accountant certified that the noter's abstract of receipts and payments for the period has been correctly stated and sufficiently vouched. As to remuneration, he has reviewed the noter's files and papers along with the statement of trouble, statement of time and fee claim. He has had regard to the complexity of the case. It required considerable input from the noter and other senior members of his team. The reporter carried out a full review of the noter's case files in the context of the 421 hours charged in the provisional period. He was satisfied that the work done was fully justified and supported by the underlying case records. Having regard to the terms of section 53(4) of the Bankruptcy (Scotland) 1985, as applied by the Insolvency (Scotland) Rules 1986, the reporter was of the opinion that the time spent by the noter and his staff during the period of provisional liquidation was properly spent, that the work was carried out at an appropriate level of seniority, and that the average hourly rates were proportionate to the size and complexity of the case. For the period of the provisional liquidation, the claimed fee should be allowed, to which vat at 20% falls to be added. The reporter reviewed detailed employee expense records to confirm the bona fides of the noter's claim for outlays of £1,047.28.

[12] It was noted that a liquidation committee was established on 11 August 2010. The fee requests for all subsequent periods were dealt with by that committee. As a consequence, there will be no requirement for a reporter to be appointed to deal with any other accounting periods in the case. The following are appended to the report: the liquidator's abstract of receipts and payments, with receipts as at 30 June 2010 standing at just under £27,000; the provisional liquidator's statement of time and trouble; and the SIP 9 analysis data (see later in this opinion for details as to this practice statement).

[13] After considering the accountant's report, I asked for further information as to the basis for and the material which supported the certificate in respect of suitable remuneration. In response to that request, I was told that the report is in a similar form and has consistent content with all other reports which the reporter has produced for the court's consideration, be they for provisional, interim or "full" periods of liquidation. The liquidator's summary of hours spent by him and his team showed an overall average hourly rate of £285.62 which, with 421.35 hours spent, equated to a proposed fee of £120,344.75 (net of vat). He had been provided with detailed hourly time records showing the individual time entries for each member of staff who had worked on the case, along with the detailed SIP 9 narrative describing the activities undertaken. Those records were reviewed in detail to ensure the appropriateness of the work carried out, that it was undertaken at the correct level of seniority, and that the detailed narrative "stacked up" with the summary provided and attached to the report.

[14] I was told that recently the reporter had suggested a restriction in the fees allowed in a number of cases where he felt that full recovery of hourly rates was not appropriate, for example in liquidations following administrations where all that was required was the collation, agreement and adjudication of creditor claims in order to effect a distribution, and where this work could easily have been done by a smaller firm, and at lower hourly rates. In the present case, the reporter's view was that the rates used were well within acceptable boundaries in the context of the prevailing market rates, and that the specific nature of the case and work undertaken meant that a fee restriction was not appropriate. The accountant's approach was discussed with the auditor in conference. He understood the auditor to agree with his conclusions.

[15] The reporter wondered if part of the concern related to the amount of the fee sought in relation to the low level of realisations disclosed by the noter's account of intromissions for the period of the provisional liquidation. Given that a liquidation committee was appointed to deal with subsequent periods, he had no knowledge of the exact amount of the realisations subsequently achieved, nor of the fees sought and approved by the committee. The bulk of realisations would have been have been from property sales. While realisations, especially from properties, will generally occur in the later stages of an appointment, much of the "heavy lifting" in terms of dealing with immediate issues, formulating a strategy for the conduct of the appointment, and senior staff time tends to be "front loaded" in the period of provisional liquidation.

[16] Subsequently the court requested the reporter to provide copies of the records and material which informed his report. In due course certain records were produced.

The report by the auditor of court

[17] In a brief report the auditor of court stated that he had considered in draft the accountant's report. The liquidator had provided details of the time spent by him and his staff, and a summary of the work involved. The auditor had conferred with the auditing accountant. The auditor reported that in his opinion a fee of £144,413.70, inclusive of vat, represented fair and reasonable remuneration to the liquidator for his whole work and responsibility in the period from 10 until 29 June 2010. To this sum there should be added outlays incurred totalling £1,047.28, with vat as appropriate.

The liquidation committee reports

[18] In advance of the hearing, the court was provided with five liquidation committee reports dated from 28 January 2011 to 5 July 2012. Initially it was indicated that these should be treated confidentially, but at the hearing counsel for the noter said that there is no sensitivity or difficulty in this regard. The reports are helpful in giving a full picture of the progress of the liquidation. They outline the liquidator's receipts and payments and summarise his actions, including the sale of the school's buildings. Information is given as to debt collection, investigations, and other issues, including dividend prospects and the liquidator's remuneration. In the first report dated 28 January 2011, the committee was informed that considerable time and effort had been employed on ensuring that the school continued to function from 10 to 29 June 2010.

[19] Under the heading of liquidator's remuneration, the committee was informed of the figure of £120,344.75 plus vat in respect of the provisional liquidation period. For 30 June to 10 August 2010, during which the noter held office as interim liquidator, 361 hours were spent by the firm's staff, giving rise to a "total cost" of £99,195.50 plus vat, plus outlays of £561.61. The report continued

"in the period following my election as liquidator at the meeting of creditors held on 11 August 2010, until 31 December 2010, 596 hours were spent by my firm's staff in relation to the above activities at a total cost of £181,331.25 plus vat and my firm's outlays in this period are £490.91 plus vat."

The committee was asked for approval of the liquidator's remuneration for the above periods, other than the provisional period which would be subject to court audit. The report concluded with the comment:

"As you will no doubt appreciate this has been an intensive case due to the sensitive nature of a school closure which has resulted in my team and I requiring to spend a considerable amount of time dealing with all matters in a careful, controlled and sensitive manner to minimise the adverse impact for the various stakeholders while ensuring that we maximise the return for the creditors."

[20] The next report is dated 10 May 2011. By this stage the total realisations amounted to £2.3 million. Following payment of certain liquidation costs and two interim distributions to the bank, the balance of funds was in the region of £432,000. The committee was informed that in the period from 1 January to 30 April 2011 "281.5 hours were spent by my firm's staff in relation to the above activities at a total cost of £95,312.75 plus vat." Again the committee was asked to approve the said remuneration. The third report is dated 22 September 2011. By this stage the total realisations amounted to circa £4.5 million. Following payment of certain liquidation costs and further interim distributions to the bank, the balance of funds was £1.7 million. The report summarised the liquidator's recent conduct of the liquidation process. A final distribution to the bank was expected shortly, and it was anticipated that preferential creditors would be paid in full. There would be a dividend available for the unsecured creditors, the precise value of which could not be finalised until all unsecured claims had been adjudicated and the costs of the liquidation settled. As to remuneration for the period 1 May to 9 September 2011, 202.25 hours were spent "at a total cost of £64,679.25 plus vat". Approval was sought in respect of receipts and payments for the said period, and also in respect of the proposed remuneration.

[21] By the time of the fourth report to the liquidation committee, dated 6 February 2012, the total realisations were around £4.6 million. Following payment of certain liquidation costs and the final distribution to the bank, the balance of funds totalled £1.1 million, which were subject to the ongoing costs of the liquidation process. By this stage the main focus was on debt collection, distribution to preferential creditors and the dividend prospect for unsecured creditors. At that stage it was thought that total employee unsecured claims could be in the region of £1.7 million. As to the liquidator's remuneration, in the period 10 September 2011 to 20 January 2012, 137.5 hours were spent by the liquidator's staff, primarily pursuing debtors and adjudicating creditors' claims, "at a total cost of £37,458.25 plus vat." As with the previous reports, the liquidation committee was asked to approve a resolution in respect of the said remuneration.

[22] In the fifth report, dated 5 July 2012, it was recorded that the total realisations amounted to £4.65 million, with a balance of funds of about £1.05 million. The report discussed debt collections; distribution to preferential creditors, for which approval of a preferential dividend at 100p in the pound (total circa £225,000) was requested; and dividend prospects for unsecured creditors. As to the liquidator's remuneration in the period from 21 January to 9 June 2012, 83.85 hours were incurred "at a total cost of £24,666.75 plus vat." Again, amongst other things, a resolution approving that remuneration was requested.

[23] The overall result is that the total realisations were £4.627m and, to date, the total approved remuneration is £502,659 (exclusive of vat). If the current claim of £120,344 is added, that figure becomes £623,003

The submissions on behalf of the noter at the hearing

[24] At the hearing the liquidator was represented by Mr Sellar QC. He observed that the remit to the reporter and the auditor has given the court the benefit of the practical experience of an experienced practitioner in this field, plus the view of the auditor of court "as an independent cross check". With reference to the five reports, the committee approved all the remuneration resolutions put before them. Reference was made to section 53(4) of the 1985 Act and to the decision of the First Division in Hyndman v Readman 2004 SLT 959. The rates charged by the provisional liquidator and his staff must be reasonable for a person of the relevant seniority. The reasonableness of such rates depends, in turn, on the firm of which the provisional liquidator is a member. As with legal work, only certain kinds of firm are appropriate for certain provisional liquidations. The more complicated the insolvency process is likely to be, the more appropriate it is for the provisional liquidator to be from a larger firm, which will have greater resources, but also higher overheads. Ultimately, the rates which are reasonable for all kinds of firm are the market rates.

[25] Mr Sellar submitted that, in commercial reality, the rates charged by insolvency practitioners of all levels are scrutinised by creditors, especially by those with the largest economic interest in the insolvency process, for example the banks and HMRC. It can be assumed that they will drive the rates down. Unfortunately, liquidation, like any other insolvency process, is an expensive exercise, especially in its initial stages. Insolvency practitioners are highly skilled professional people, whose rates are not low. The information given to the reporter and to the liquidation committee complied with the SIP 9 statement, which is issued jointly by the regulatory bodies, including ICAS. Reliance was placed upon the reporter's conclusion that the remuneration claimed is reasonable. This was supported by the fact that the subsequent remuneration resolutions were approved without demur by the liquidation committee. The committee included three representatives of institutional creditors, being the Scottish Qualifications Authority, HMRC, and Miller Homes Ltd, which was the landlord of the playing fields leased by the school. Two other creditors (both individuals) were on the committee. The largest creditor of the school was The Royal Bank of Scotland plc. It was submitted that the bank would have made its views known if it had felt that the claimed remuneration was unreasonably high.

[26] Mr Sellar submitted that the work required was significantly more intensive and difficult because the provisional liquidation involved a school, and not a more usual and simpler business, such as a factory or a property portfolio. The school was a highly regulated business. The provisional liquidation came without warning to staff and parents. The provisional liquidator embarked upon a sensitive process which was a matter of intense media interest. Significantly more work was required than would be usual in a "standard" provisional liquidation. More work was required at a senior level, particularly from the provisional liquidator himself and his senior manager, who is also an insolvency practitioner and a chartered accountant. Two other very experienced assistant managers were involved, one of whom is a chartered accountant. Mr Sellar offered a number of illustrations as to how and why the present case was unusual, and required a greater intensity of involvement by the provisional liquidator and his staff. One example was the need to inform parents and respond to questions concerning what was to happen to their children's education. A telephone hotline was established. Mr Sellar offered the view that the whole matter was "uniquely difficult and time consuming".

[27] The realisations of £4.627m exceeded the property valuation of £2,575,000 which the governors had estimated in the statement of affairs. I was told that the percentage of proposed overall fee to realisations of 13.5% is within the usual range of outcomes in a liquidation. The secured creditor has been paid in full its total debt of some £2.5 million (including interest). The preferential creditors have been paid in full their total debt of £243,000. As regards the so far admitted claims of 210 ordinary unsecured creditors, it is conservatively estimated that they will each receive a dividend of perhaps up to 19%.

Discussion and decision

[28] The court must apply the terms of section 53(4) of the Bankruptcy (Scotland) Act 1985. It allows for remuneration to be fixed on a commission basis, calculated by reference to the value of the realisations, and provides that there shall in any event be taken into account -

"(a) the work which, having regard to that value, was reasonably undertaken by (the liquidator); and

(b) the extent of his responsibilities in administering the debtor's estate."

In Hyndman the First Division confirmed that this provision does not require the application of a commission basis in all cases. The court held that the sheriff was entitled to measure the extent of the work undertaken, which would "fall to be ascertained by reference to the standards, rates and practices of the relevant profession". Subsections (4)(a) and (b) are not to be understood as the test for remuneration, nor as excluding any other consideration. "Even by themselves they do not prescribe how the value of the assets or the responsibilities of the liquidator are to be taken into account." The sheriff was entitled to place weight upon the accountant's report, which said that the rates charged were "the usual rates applied by the respondent's firm and were within the range of rates charged by firms specialising in insolvency work ...", and that the work had been properly undertaken.

[29] In paragraph 3 of his opinion in Joint Liquidators of Park Gardens Investments Limited 2011 SLT 906, Lord Glennie provided a helpful outline of the history of the general practice whereby, as here, the court obtains advice from an accountant experienced in this type of work, along with that of the auditor of court. While these reports will always carry great weight, the decision remains for the court and the court alone, having regard to all the relevant circumstances of the case. The liquidator is an officer of the court, and it is appropriate that the court should have the ultimate decision on appropriate remuneration. It may be thought that if the advice is all in favour of the claim, there is little left to the court's discretion. In most cases that will be true, but the role of the court provides a safeguard for any case where it is apparent that nonetheless something is amiss.

[30] A liquidator's fees are paid out of the realised assets of the company in priority to the claims of creditors. It follows that in the case of an insolvent company, the creditors, and often particularly the unsecured creditors, will have an interest in the matter. If creditors can be paid in full, the contributories will be directly affected by the amount paid to the liquidator. (I am using "liquidator" as shorthand in respect of all the variety of officials charged with responsibilities in the case of corporate or personal insolvencies.) Quite reasonably Mr Sellar placed emphasis upon the fact that the noter's substantial fee claims in respect of the interim and full liquidation procedures (amounting in total to £502,659, exclusive of vat) had been approved by the liquidation committee. It may be asked, if the creditors are unconcerned, why should the court spend time deliberating on the application? However, there is a limit to the extent to which creditors, and particularly unsecured creditors, can be relied upon to scrutinise and police such claims. Often they will be relatively ignorant of the whole process, and may well be a diffuse and diverse group without the benefit of independent reports or advice. A creditor might be reluctant to antagonise the individual whom he hopes will be of help in respect of his claim. He may be concerned about maintaining a dispute regarding the liquidator's proposed fee, not least in respect of how this would be resolved, and of the potential costs, especially since there is already an outstanding debt. I am not wholly convinced that creditors such as HMRC and the banks can be relied upon to, as Mr Sellar put it, "drive down the market rates" of insolvency practitioners. In the case of banks at least, often their debt will be secured with little risk of the liquidator's fee impinging upon their recoveries. In the present case the bank was paid in full.

[31] I do place weight on the approval of the proposed resolutions by the liquidation committee, and I note that they were informed of the claim for the provisional period. For the future I would advise that in reports to committees the proposed fee should not be described as "a cost" already incurred by the liquidator. It should be made clear that the committee is being asked to exercise a judgment as to whether the proposed remuneration is reasonable and appropriate (or words to that effect). A proposed fee is in a different category from outlays. The scope for disagreement or questioning should be obvious to the readers of the report.

[32] South of the border the statutory background is similar. The Chief Bankruptcy Registrar of the Chancery Division has issued a practice statement entitled "The Fixing and Appraisal of the Remuneration of Appointees (2004)". ("Appointees" covers liquidators, administrators, trustees in bankruptcy, etc.). This guidance is of relevance and assistance in Scotland. In large measure it is repeated in the Statement of Insolvency Practice 9 (Scotland) (SIP 9) on Remuneration of Insolvency Office Holders (2010). SIP 9 was issued under a procedure agreed between the insolvency regulatory authorities acting through the Joint Insolvency Committee. (Those authorities include ICAS and the Law Society of Scotland). From these two documents one can derive the following general principles, which I am happy to adopt.

1. The office holder must tender and be able to justify an explanation of what he has achieved and how it was achieved, to enable the value of the exercise to be assessed, and to establish that the time spent was properly spent on the case.

2. Any element of doubt as to the appropriateness, fairness or reasonableness of the claimed fee should be resolved against the appointee.

3. Weight should be given to the fact that the appointee is a member of a regulated profession.

4. The fee should reflect and reward the value of the service rendered, not simply reimbursement in respect of time expended and cost incurred. The fee should represent "fair and reasonable remuneration" for work properly undertaken. It should be proportional to the nature, complexity and extent of the work carried out by the appointee, the responsibility undertaken, and the efficiency of the service provided.

[33] SIP 9 lays down guidance as to the information to be provided to allow an appropriate fee to be fixed. The auditing accountant has confirmed that, in the present case, all the appropriate information has been supplied. Amongst other things it shows that during the 20 day period of the provisional liquidation, the liquidator devoted 46.3 hours to the exercise (at a charge out rate of £515 per hour); a manager or managers devoted a total of just under 72.8 hours (at £405 per hour); 295.25 administrator hours (at £225 per hour) were spent; along with seven hours of support staff time (at £105 per hour). The total proposed charge (exclusive of vat) is £120,344.75. Thus the average hourly charge for the 421.35 hours is £285.62.

[34] It seems to me that, in large measure, it is the level of seniority and the hourly rates of those involved which explains the size of the proposed fee, and also the amounts claimed and approved in respect of later periods. It is said, and the accountant reporter has confirmed, that these are "the market rates" for a firm of the size of KPMG, which will have substantial overheads. It is submitted that it is only fair and reasonable that the market rates are recoverable. From other cases which come before the court it is apparent that rates do vary from firm to firm. The court has been advised by the auditing accountant, with whom the auditor of court agreed, that:

(a) the work done was all required to be done

(b) it was carried out at an appropriate level of seniority within the firm, and

(c) the hourly rates charged are reasonable having regard to the general level of rates charged by firms such as KPMG.

Nonetheless I retain a sense of surprise and concern at a proposed fee of over £120,000 (exclusive of vat) for 20 days work, and I suspect that many will find it remarkable that the winding up of a middling size private school can generate fees of over £620,000 (again exclusive of vat). Mr Sellar informed the court that a percentage fee of about 13.5% of realisations is in line with that allowed in other cases calculated on a commission basis. No doubt that is a valuable cross check in favour of the current claim, but I note that no one has suggested that any of the liquidator's fees have been or should be determined on that basis. My impression is that it is relatively uncommon for the court to be asked to fix remuneration on a percentage basis, but it may be that such tend to be agreed in advance and do not trouble the commercial judges.

[35] Whatever one's reaction to the fees and proposed fees in this case might be, the court cannot simply reject the clear advice of the reporter and the auditor of court without cogent and objectively justifiable reasons for doing so. If professional insolvency practitioners and their firms routinely charge hourly rates for partners, managers and administrators in the region of those proposed in the present case, one judge sitting alone, determining one application, cannot put all that to one side and pluck other figures out of the air. My impression is that for many years the court has been prepared to sanction fee claims on the basis that if the work done, and the hourly rates for those doing it, are in line with market practices and rates, then that is acceptable. (I have already referred to the approach adopted in Hyndman). The true role of this case may be to prompt the court, and perhaps others, to reflect on the whole matter, and assess what, if any, lessons are to be learned. Work of this nature, especially in difficult and sensitive cases, may simply be very intensive and expensive and require the use of a large number of highly qualified and skilled people. But where there is a pot of money to be distributed, it is important that the party responsible for the distribution is subject to robust scrutiny as to his fees and costs, especially when he enjoys priority over other claims. This remains true even if no public money is involved.

[36] To be fair, it was the court that chose to appoint a very experienced practitioner from one of the larger firms, no doubt for good reason. On any view this was a complex and unusual liquidation. I can readily understand that it demanded extra work and required a great deal of careful and skilful handling, particularly at the outset, when concerns and anxieties would have been at their height. It can be assumed that the work undertaken at that stage laid the foundations for the subsequent relatively smooth realisation of the school's assets, the adjudication of claims, and the distribution of the recoveries.

[37] I am told in terms that the rates charged are the market rates for a firm of this size, and that all the work done required to be done at the reported level of seniority of the staff involved. All the appropriate documentation and other information has been supplied by the noter. In all the circumstances I shall grant the noter's application in full.

[38] Perhaps it is no bad thing that, now and again, an opinion is issued which shows how these matters are presented to, and addressed by the court. Generally they are resolved without any public hearing or publicity. There is at least a risk that the fee levels and general practices and procedures seen as normal in the corporate insolvency world become, when the court is asked to adjudicate, in a sense self-fulfilling. This highlights the important role of the auditor of court in the current system, given that he is not directly involved in such work. It may also be that, from time to time, and in the light of experience, the judges should review current practice to check whether there is room for improvements in the court's procedures which might help it to exercise its jurisdiction under the insolvency rules.