DIB CLAIMS VICTORY IN LATEST ROUND OF NMC DISPUTE
▶ Case heads to arbitration with order to pay 75% of lender’s costs
Dubai Islamic Bank yesterday said it remained committed to the restructuring of NMC Healthcare but added the process “must be based on an acknowledgement of existing legitimate security interests” after winning the latest round of a legal tussle in the Abu Dhabi Global Market Courts.
The joint administrators for NMC, Richard Fleming and Benjamin Cairns of Alvarez & Marsal, had brought legal action against DIB in March. The dispute relates to the lender’s attempts to enforce its security over sums held by 12 insurers that the healthcare company set aside as collateral for loans.
Administrators had argued that a moratorium on all legal proceedings in the UAE related to the healthcare group had been secured once NMC Healthcare and 35 other entities were placed into administration in the ADGM Courts in September last year.
However, DIB had challenged ADGM Courts’ jurisdiction to rule in its legal disputes with the insurers. In a hearing last week, the judge referred the case to arbitration, but ordered administrators to pay both their own and 75 per cent of DIB’s legal costs thus far. The Dubai lender’s legal costs are $1.2 million, Reuters reported last week, citing a court transcript that has yet to be filed on the ADGM Courts website.
“The judge affirmed that DIB was ‘the overall winner in this phase of the legislation’,” the lender said in a statement to the Dubai Financial Market, where its shares are traded.
“In addition to the ADGM legal proceedings, DIB continues to successfully obtain judgments in our favour in the Dubai Courts ordering the relevant insurance companies to make payments” assigned to the lender under its loan agreement with NMC, it said.
“DIB is one of the largest creditors to the NMC Group. We affirm our commitment to support a restructuring of the NMC business to ensure its successful emergence from administration,” the lender said.
“Any such restructuring must be based on an acknowledgement of existing legitimate security interests in accordance with the provisions of applicable laws,” the bank said.
NMC was founded by BR Shetty in 1975 from a single clinic and grew to become the UAE’s largest privately-owned healthcare group, with a listing on the London Stock Exchange that valued the company at £8.58 billion ($11.8bn) at its peak in August 2018.
However, an independent investigation was commissioned after activist short seller Muddy Waters issued a report in December 2019 alleging it had inflated its assets and under-reported its debt.
The investigation uncovered more than $4bn of previously unreported debt owed to hundreds of lenders. DIB was NMC’s second-biggest creditor in the UAE and owed about $425m.
DIB stood to recoup about $19m of this through the formal restructuring process without imposing security, or about $86m through the imposition of securities, according to figures that were provided to the ADGM Court hearing.
Administrators argued this would have a “considerable impact on what would be available to pay other creditors”.
Alvarez & Marsal said it had secured important rights on behalf of other creditors in respect of receivables that “have been appropriated by DIB” through the ADGM Court action. The lender “seems to be making too much of seeking to undermine the successful restructuring of an essential asset” of the UAE’s health services, it said.
A restructuring process has been approved by creditors that will cut NMC’s debt to $2.25bn.