Re Econ Corp Ltd: Determining Remuneration for Provisional Liquidators in Insolvency Cases
In Re Econ Corp Ltd, the Singapore High Court, presided over by V K Rajah JC, addressed an application by former provisional liquidators seeking court determination of their remuneration. The Interim Judicial Managers opposed the application, arguing the claimed fees were excessive. The court outlined principles for assessing insolvency practitioners' remuneration, emphasizing fairness, reasonableness, and value contributed, and ultimately disallowed the application pending further disclosure by the applicants.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Application disallowed pending further disclosure by the applicants.
1.3 Case Type
Insolvency
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
The High Court addresses the principles for determining remuneration for provisional liquidators, emphasizing fairness, reasonableness, and value contributed in insolvency practice.
1.7 Decision Date
2. Parties and Outcomes
Party Name | Role | Type | Outcome | Outcome Type | Counsels |
---|---|---|---|---|---|
Econ Corporation Limited | Respondent | Corporation | Application disallowed pending further disclosure by the applicants. | Neutral | |
Former provisional liquidators of Econ Corporation Limited | Applicant | Other | Application disallowed pending further disclosure by the applicants. | Lost |
3. Judges
Judge Name | Title | Delivered Judgment |
---|---|---|
V K Rajah | Judicial Commissioner | Yes |
4. Counsels
4. Facts
- The company is the second largest local construction company with liabilities exceeding assets by around $88m.
- The directors resolved to place the company under a creditors’ voluntary winding up on 26 November 2003.
- The applicants were appointed as provisional liquidators on 26 November 2003.
- The applicants were displaced as provisional liquidators on 6 January 2004.
- The applicants sought remuneration of $263,705.00 for their services.
- The Interim Judicial Managers opposed the application, asserting the remuneration sought was excessive.
- The applicants had set aside $564,000 to meet their fees and disbursements.
5. Formal Citations
- Re Econ Corp Ltd (in provisional liquidation) (No 2), OS 1791/2003, [2004] SGHC 49
6. Timeline
Date | Event |
---|---|
Court declined to sanction a scheme of arrangement proposed by the company. | |
Directors resolved to place the company under a creditors’ voluntary winding up and appointed the applicants as provisional liquidators. | |
Applicants' appointment as provisional liquidators began. | |
Applicants' appointment as provisional liquidators ended. | |
Order was made for the appointment of the Interim Judicial Managers, displacing the applicants. | |
Interim Judicial Managers requested documentation from the applicants. | |
Interim Judicial Managers requested a detailed breakdown of the summary of work. | |
Parties first appeared before the court. | |
Applicants filed their reply affidavit. | |
Judgment reserved. |
7. Legal Issues
- Determination of Remuneration for Provisional Liquidators
- Outcome: The court outlined principles for assessing insolvency practitioners' remuneration, emphasizing fairness, reasonableness, and value contributed, and disallowed the application pending further disclosure.
- Category: Substantive
- Sub-Issues:
- Justification of fees
- Reasonableness of time costs
- Value contributed by insolvency practitioner
8. Remedies Sought
- Court determination of remuneration
- Payment of assessed amount as a priority debt
9. Cause of Actions
- Application for determination of remuneration
10. Practice Areas
- Insolvency
- Liquidation
11. Industries
- Construction
12. Cited Cases
Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
---|---|---|---|---|---|
Re Econ Corp Ltd | High Court | Yes | [2004] 1 SLR 273 | Singapore | Cited for the prior unsuccessful scheme of arrangement proposed by the company. |
Mirror Group Newspapers plc v Maxwell (No 2) | Not specified | Yes | [1998] 1 BCLC 638 | England | Cited for the principles regarding the remuneration of court-appointed receivers and the fiduciary duty of office-holders to justify their claims. |
In re Potters Oils Ltd | Not specified | Yes | [1986] 1 WLR 201 | England | Cited for the observation that the court is ill-equipped to conduct a detailed investigation of receivers’ charges on an itemized basis. |
Re Peregrine Investments Holdings Ltd | Hong Kong Court of Appeal | Yes | [1999] 3 HKC 291 | Hong Kong | Cited for affirming the principles in Mirror Group Newspapers plc v Maxwell (No 2) regarding the justification of remuneration claims by fiduciaries. |
Venetian Nominees Pty Ltd v Conlan | Full Court of the Supreme Court of Western Australia | Yes | (1998) 16 ACLC 1653 | Australia | Cited for the principle that the onus is on the provisional liquidator to establish that the remuneration claimed is fair and reasonable. |
Re Galdonost Dynamics (NZ) Ltd (In Liquidation) | Not specified | Yes | [1994] 2 NZLR 605 | New Zealand | Cited for the principles applicable to the assessment of a liquidator’s fee, including normal commercial practice and adequate identification of profit rates and overheads. |
Re Medforce Healthcare Services Ltd (In Liquidation) (No 2) | Not specified | Yes | [2001] 3 NZLR 158 | New Zealand | Cited for the principle that a key factor for the court’s consideration is to identify the appropriate balance, to ensure that the courts have sufficient information to enable them to reach a conclusion that the fees sought are reasonable, without imposing a cost upon insolvency practitioners that would significantly and adversely affect the returns to creditors. |
Chan Ket Teck v Seet | Not specified | Yes | [1994] 1 SLR 567 | Singapore | Discussed and distinguished; the court found that the liquidators were entitled to their fees as there was no evidence to suggest that “they had acted fraudulently or in a manner that disentitled them to charge in accordance with the special resolution to wind up the company”. |
Sumitomo Bank Ltd v Kartika Ratna Thahir (No 2) | Not specified | Yes | [1997] 1 SLR 690 | Singapore | Cited for the principle that the process of assessment of party and party costs is not a matter of mathematical multiplication, with assumed multiplier and multiplicand, nor are time sheets conclusive of the total amount of time which reasonably would have been spent on any particular aspect of the getting-up. |
In re Carton, Limited | Not specified | Yes | (1923) 39 TLR 194 | England | Cited for the principle that the Court as a general rule only fixes remuneration on a time-basis if there is no other method which would operate to give the liquidator a fair remuneration. |
In re Nash & Sons | Not specified | Yes | [1896] 1 QB 13 | England | Cited for the court's inherent jurisdiction to direct the official receiver to attend any hearing where such an issue may arise. |
Re Trustees Executors & Agency Co Ltd | Not specified | Yes | (1984) 9 ACLR 497 | Australia | Cited for the principle that the remuneration that an insolvency practitioner can command embraces compensation for the assistance of employees of their firms. |
13. Applicable Rules
Rule Name |
---|
Insolvency Rules 1986, rr 4.127 to 4.131 |
Insolvency Rules 1986, Rule 4.130(2) |
Companies (Winding Up) Rules (Cap 50, R 1, 1990 Rev Ed), Rule 188 |
Companies (Winding Up) Rules (Cap 50, R 1, 1990 Rev Ed), Rule 142(1) |
Companies (Winding Up) Rules (Cap 50, R 1, 1990 Rev Ed), Rule 142(2) |
Companies (Winding Up) Rules (Cap 50, R 1, 1990 Rev Ed), Rule 171 |
Companies (Winding Up) Rules (Cap 50, R 1, 1990 Rev Ed), Rule 165 |
Companies (Winding Up) Rules (Cap 50, R 1, 1990 Rev Ed), Rule 173 |
Companies (Winding Up) Rules (Cap 50, R 1, 1990 Rev Ed), rr 4 and 6 |
Rules of Court (Cap 322, R 5, 1997 Rev Ed), O 32 r 9 |
Fees (Winding Up of Companies) Order (Cap 106, O 35, 2001 Rev Ed) |
14. Applicable Statutes
Statute Name | Jurisdiction |
---|---|
Companies Act (Cap 50, 1994 Rev Ed) | Singapore |
Companies Act (Cap 50, 1994 Rev Ed), Section 268(2) | Singapore |
Companies Act (Cap 50, 1994 Rev Ed), Section 311 | Singapore |
Companies Act (Cap 50, 1994 Rev Ed), Section 268(3) | Singapore |
Companies Act (Cap 50, 1994 Rev Ed), Section 328(1)(a) | Singapore |
Companies Act (Cap 50, 1994 Rev Ed), Section 219 | Singapore |
Companies Act (Cap 50, 1994 Rev Ed), Section 265 | Singapore |
Companies Act (Cap 50, 1994 Rev Ed), Section 227G(5) | Singapore |
Companies Act (Cap 50, 1994 Rev Ed), Section 227Q | Singapore |
Companies Ordinance (Cap 32), Section 196(2) | Hong Kong |
Corporations Act 2001, Section 473 | Australia |
Companies Act 1993, Section 276 | New Zealand |
Supreme Court of Judicature Act (Cap 322, 1999 Rev Ed), Section 62 | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Provisional liquidator
- Remuneration
- Insolvency practitioner
- Interim judicial manager
- Time-costing basis
- Value contributed
- Fairness
- Reasonableness
- Priority debt
- Winding up
15.2 Keywords
- Insolvency
- Liquidation
- Provisional Liquidator
- Remuneration
- Companies Act
- Singapore
- High Court
17. Areas of Law
Area Name | Relevance Score |
---|---|
Insolvency Law | 95 |
Winding Up | 90 |
Remuneration of Liquidators | 80 |
Insolvency Practice | 75 |
Juvenile Law | 70 |
Company Law | 60 |
Civil Procedure | 30 |
16. Subjects
- Insolvency
- Liquidation
- Remuneration of Insolvency Practitioners