Health

NMC and Dubai Islamic Bank end legal dispute

March 19, 2024, 10:13 AM

An NMC hospital in Abu Dhabi. The business was founded in the 1970s and went into administration in 2020

DIB had lent $400m
‘Legacy disputes’ settled
NMC now runs 85 clinics

NMC Healthcare has reached an out-of-court settlement with Dubai Islamic Bank, ending the long-running legal dispute between the two businesses.

The healthcare operator had borrowed around $400 million from DIB, which is the largest Islamic bank in the UAE. The loan used collateral known as insurance receivables, which are payments by insurance companies for medical treatment.

When NMC went into administration in 2020, DIB sought rights to those securities in cases filed in Dubai.

However, the administrator, Alvarez & Marsal, argued that the cases should be heard through the Abu Dhabi Global Market (ADGM) courts, where NMC Healthcare and its 35 associated companies were placed into administration.

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A joint statement from the companies on Tuesday said they had signed a global settlement agreement that “addresses and amicably resolves the parties’ legacy disputes arising from the old NMC Healthcare’s entry into administration and restructuring process”.

Founded by Indian businessman BR Shetty in the mid-1970s, NMC was the UAE’s biggest privately owned healthcare operator. It ran clinics and hospitals, as well as specialised maternity and fertility clinics and long-term care homes, in 19 countries.

Its issues began in late 2019 when US short-seller Muddy Waters Research questioned its finances, leading to a sharp fall in its share price. The company, which had been listed on the London Stock Exchange, went into administration after it disclosed over $4 billion in hidden debt.

DIB will receive a cash consideration and Holdco notes – instruments that were issued to NMC’s legacy creditors in exchange for their admitted claims in September 2021.

As a result, the bank will become an owner of NMC Holdco SPV, NMC’s new holding company, through its subsidiary NMC Opco.

NMC Opco, which is based in the ADGM, owns and operates 85 healthcare facilities in the UAE and across the region.

“The settlement also provides that all parties will cease and discontinue all current proceedings between them, with no admission of liability made by any of the parties,” the statement said.

Last year the administrator filed a $4 billion lawsuit against Shetty, related to allegations of fraud.

Alvarez & Marsal has also launched a $2.5 billion lawsuit against the UK operation of accountancy giant EY, alleging “audit negligence” between 2012 and 2018.

Shetty has denied any wrongdoing and maintains that he has been the victim of fraud.

The Indian entrepreneur has launched his own lawsuits against former top executives of his companies, banks and EY, seeking $8 billion in damages for alleged fraud.

These allegations have also been denied and the cases are ongoing.