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NMC had resorted to requesting accelerated payments from an Abu Dhabi-controlled health insurer to pay salaries, the court heard.
It also heard evidence from ADCB that in late February NMC defaulted on a $1bn facility when it failed to make a $71m payment. This triggered another default concerning a $250m debt facility with ADCB and Standard Chartered Bank.
Mr Robins also claimed there were concerns that the group was struggling to pay debts and access cash to pay staff salaries and that it was suffering from “extremely serious cash flow difficulties”.
Mr Shetty, who has a stake of around 5 per cent in NMC, said in a statement he had been carrying out his own investigations and would make their findings known as soon as possible. “I am extremely eager and determined to bring to light the full facts,” he said.
NMC Health has been placed into administration by a UK high court judge who said that “something had gone very wrong with the management and oversight” of the company as he granted an application from creditors led by Abu Dhabi Commercial Bank.
Judge Sebastian Prentis said on Thursday he was satisfied that the healthcare provider was cash flow insolvent and granted ADCB’s application to have Alvarez & Marsal appointed as administrators.
NMC’s future has been uncertain in recent weeks since the Middle East-focused group found evidence of suspected fraud in its finances and reported previously undisclosed liabilities, which raised its net debt pile to $6.6bn. An independent investigation, following allegations of financial irregularities made by a US short seller last year, was commissioned by the healthcare provider and revealed unauthorised off-balance sheet financing.
ADCB has almost $1bn in debt exposure to NMC. Its application to the court was backed by other bank creditors including Barclays, which has a $146m exposure, Dubai Islamic Bank which is owed $541m, Abu Dhabi Islamic Bank which is owed $325m and Standard Chartered.
“It is clear that something has gone very wrong with the management and oversight of the company,” Mr Prentis said in reference to NMC’s series of public announcements on its finances since the start of the year, but added that allegations of fraud against the company were “just that”.
NMC was founded by Indian entrepreneur BR Shetty and is the biggest independent healthcare provider in the UAE, employing 20,000 people including 2,000 doctors.
“All hospitals, medical centres, care facilities and other operations in the group are not subject to the administration procedure, so their current activities will not change,” said Richard Fleming, managing director of Alvarez & Marsal Europe and joint administrator, who said the priority was to ensure patient care during the coronavirus pandemic.
Mr Prentis said the administration process would enable NMC to keep trading. Its lenders will put in place a funding agreement to keep the group operational in the short term, the court heard.
The group did not participate in the hearing but said in a letter read by the judge that, in the absence of creditor support, it was not in a position to oppose the administration. It added that neither the company nor the board accepted any allegations of wrongdoing.
Mr Prentis said he was satisfied that NMC met the legal test for being placed into administration for being “cash flow insolvent” after hearing from ADCB’s barrister Stephen Robins that the company had missed its February payroll payment date, although that obligation had now been met.