Background

FRP’s Forensic Services team was engaged by the respondents, two banks, in an LCIA (London Court of International Arbitration) matter in which a healthcare provider was the claimant, all based in the Middle East. The claimant entered into administration, at which point the respondent’s filed debt claims against the claimant which the respondents alleged were secured against health insurance receivables. The claimant filed an arbitration claiming, inter alia, that the security was not valid and, even if it was valid, the value of the security did not cover the value of the debt. FRP was engaged to quantify the value of that alleged security.

Action

FRP produced a report quantifying the historical value of the health insurance receivables using a database produced by the claimant and prepared in SQL. FRP subcontracted with Stout (co-member of Eight International) for help with the data analytics of the SQL database, which contained millions of lines of data regarding invoices relating to claims across dozens of the claimant’s entities. FRP / Stout identified several issues with the SQL database, but ultimately the differences with the claimant’s expert were minimal. FRP also quantified the value of the future insurance receivables, which was substantial, however we were ultimately instructed not to include this in the report. This analysis involved preparing a discounted cashflow model forecasting the cashflows that would arise from the future insurance receivables based on the historical trend of cashflows as derived from the SQL database. Finally, FRP analysed the supporting evidence underlying the SQL database and prepared an analysis for the Tribunal outlining concerns regarding the completeness of the SQL database. While the respondent’s expert and factual witnesses had made statements regarding the completeness and accuracy of the data, there was no supporting evidence to allow any independent third party to confirm completeness as the underlying source material for the database was never disclosed. In addition, FRP analysed the activity in each of the banks’ collection accounts to identify the quantum of historical insurance receivables for which a specific health care provider could not be identified.

Outcome

The outcome of the matter is pending.