Hindering restructure will be ‘counter productive’ for Abu Dhabi’s NMC Health: Administrators

Dubai: The joint administrators appointed for the restructuring of NMC Healthcare said on Sunday that they are facing hurdles, as one of the lenders is not cooperating with the process.

NMC, the largest private healthcare provider in the UAE, ran into trouble last year after the disclosure of more than $4 billion in hidden debt left many UAE and overseas lenders with heavy losses.

In September 2020, ADGM Courts appointed Richard Fleming and Ben Cairns of Alvarez & Marsal as administrators for NMC Healthcare’s group of operating companies and businesses.

In April, Alvarez & Marsal said it had received approval of $6.4 billion from lenders. This includes $6.3 billion from a group of 136 creditors and another $650 million potential claims of 10 creditors.

Working with creditors

“JAs have tried to work very closely with its (several hundred) creditors to seek their views on long-term approaches that would ultimately deliver maximum returns to creditors while ensuring NMC’s survival as value-generating going concern,” the administrators said in a statement.

The JA wants to propose (and shortly launch) ADGM deeds of company arrangement (DOCA) that will allow the operating businesses to exit administration, with ownership moving to the creditors.

The administrators said in statement on Sunday while most creditors support the restructuring, Dubai Islamic Bank (DIB) is the only lender that has not supported the decision to do DOCA

DIB’s objections

According to the JAs, the resistance to the joint administrators’ current application in the ADGM is simply another example  to frustrate the process.

NMC brought the case to determine whether DIB’s security was valid; and if so whether this security was fixed or floating security – the answer to these questions are significant and have a material impact on other creditors returns.

In May this year DIB secured a ruling against the administrators of NMC, relating to more than $400 million in exposure to NMC, lent to the company using collateral known as insurance receivables, which relate to payments by insurance companies for medical treatment.

Administrators said, instead of yielding to this application and resolving this issue in the ADGM, DIB sought to invoke arbitration agreements within the finance facilities again with a view to seeking a stay of the JA's application to protect their onshore claims and their own recoveries.

“Investigations on the cause and facilitation of the fraud which was catalyst to the crisis that befell NMC in February 2020 is ongoing and progressing at pace. Following the formal launch of the DOCA the Joint Administrators intend to start commencing legal actions,” said Richard Fleming, Managing Director of Alvarez & Marsal Europe LLP and Joint Administrator of NMC Health LLC

“There are certain parties that have a strong interest in NMC not being able to achieve the wherewithal to pursue these legal actions.”