Court awards $12m with 'uplift' on bill for consultancy

The High Court awarded insolvency consultants nTan Corporate Advisory $12.043 million in professional fees for its work with then troubled company TT International.

In a case where the value and effect of the work done by nTan was disputed between the parties, Judicial Commissioner Aedit Abdullah remarked after considering all submissions that "it is not possible to come to a clear conclusion on the value created by (nTan)'s efforts".

But he did rule that there should be an " uplift" on the actual time costs incurred by nTan in judgment grounds issued on Tuesday.

The case has its roots in the global financial crisis of 2008.

Caught up in the crisis, mainboard listed TT International hired nTan as an independent financial adviser to deal with a worsening position that included creditor claims involving some $607.03 million.

nTan has a track record of turning around failing companies and part of the payout agreement with TT International included a "value- added fee" or VAF.

The VAF was essentially a success fee based on a percentage of the debt owed by TT International to its creditors, which nTan was able to get waived, written off or converted to equity through a restructuring scheme that nTan would put in place.

But the judge found the value added by nTan "was not shown to be of the scale contemplated by the VAF formula". He noted the VAF claimed under the contract was more than $27.6 million, which he said was not of the level to be ascribed to nTan for the value it created for TT International.

WongPartnership lawyers led by Mr Chan Hock Keng argued for TT International that the billed time costs from October 2008 to May 2011 were sufficient to compensate nTan's work, as well as a $500,000 deposit. But nTan's lawyers from Allen & Gledhill led by Senior Counsel Edwin Tong disagreed, urging the court to look at examples of professional fees charged in other restructuring engagements as benchmarks for comparison, among other things. It created value for the company which remained a going concern some six years after the scheme was sanctioned in 2010.

The judge pointed out that unlike legal costs where there are guidelines in place, " fees for schemes are currently left entirely for determination by market forces". And so "it by no means follows that the fees agreed are fair and reasonable".

He held that considering the value of the work, the time costs and other factors, an appropriate figure would be an " uplift" on the actual time costs incurred. "In the absence of clear evidence supporting (nTan)'s claim", a fair, adequate and reasonable fee for the work is the billed and unbilled time costs, the outstanding disbursements and the $500,000 deposit, he said. All these added up to $12,042,899, of which $10,766,164 had already been paid.

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A version of this article appeared in the print edition of The Straits Times on August 25, 2017, with the headline Court awards $12m with 'uplift' on bill for consultancy. Subscribe