IBC Section 144: Fees of bankruptcy trustee

Section 144 of Insolvency and Bankruptcy Code, 2016: Fees of bankruptcy trustee

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

(1) A bankruptcy trustee appointed for conducting the bankruptcy process shall charge such fees as may be specified in proportion to the value of the estate of the bankrupt.

(2) The fees for the conduct of the bankruptcy process shall be paid to the bankruptcy trustee from the distribution of the estate of the bankrupt in the manner provided in section 178.

Legal Commentary & Landmark Judgments: Section 144

Section 144 governs the determination, approval, and payment of the fees and administrative expenses of the Bankruptcy Trustee.

Fee Determination: The fees of the bankruptcy trustee are determined by the committee of creditors or fixed by the Adjudicating Authority in accordance with IBBI regulations.
Reimbursement of Actual Costs: The trustee is entitled to be reimbursed from the bankrupt's estate for all reasonable out-of-pocket expenses incurred in the administration.
First Charge Priority: Trustee fees and bankruptcy administration costs enjoy absolute first priority in the payment waterfall under Section 178.

Key Landmark Precedents:

Committee of Creditors of Essar Steel v. Satish Kumar Gupta (2020) 8 SCC 531: The Supreme Court emphasized that insolvency and liquidation costs are given super-priority under the Code to ensure seamless administration of defaulting estates.
Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: Affirmed that professional compensation for insolvency practitioners is a statutorily protected cost essential for system functionality.

Courtroom Practice & Strategic Litigation Guidance:

Trustees must submit detailed monthly itemized fee sheets and disbursement vouchers to the creditors' committee to ensure seamless approval and prevent fee taxation disputes at the time of final estate accounting.