How Quinn Emanuel helped save NMC Group from a multi-billion dollar meltdown
Fourteen hours a day for months, with no days off. A premium company listed on the London Stock Exchange on the brink of annihilation. Suspicions of fraud at the highest level. A haunting fear that in the end, all of this will come to nothing. Completed with all the ingredients that made the upstart Arab nation the wonder of its time.
As Quinn Emanuel Urquhart and Richard East, Sullivan’s senior partner in London, tell the story of the saga to save UAE-based NMC Health Group from oblivion, it’s clear the complexity of the task could have defeat companies without the same depth of courage and experience.
Last week, the company announced that it had obtained consent from an Abu Dhabi Global Market Court (ADGM) to issue a declaratory order confirming the $7.6 billion financial restructuring of NMC Group, which was implemented through an extrajudicial procedure. through corporate documents.
He said the order marked the culmination of “a series of innovative and extraordinary court orders and transactions engineered by Quinn Emanuel’s team”, which ultimately paved the way for the first-ever Arab Emirates administration. united and the subsequent restructuring of the NMC group.
In early 2020, the directors of FTSE 100 company NMC Health, which then had a market capitalization of around $10 billion, announced to the market that they had uncovered evidence of fraud and previously undisclosed debts of about $5 billion, nearly three times the size of the group’s disclosed bank debt.
On April 7, 2020, Quinn Emanuel successfully represented Abu Dhabi Commercial Bank (ADCB), NMC Group’s largest creditor, in an application to the English High Court to put NMC Health PLC into administration. Insolvency practitioners Alvarez & Marsal have been appointed administrators.
“This was the first administrative order issued against a FTSE 100 company and particularly notable for being a creditor-led claim against a healthcare giant, in the early months of the COVID-19 pandemic,” said said the company.
The problem was that because UAE courts did not recognize orders from foreign courts, English administrators were unable to take action to save the healthcare company or secure the value of the creditors of the band.
East identified the ADGM as having a number of key advantages, primarily the fact that it enabled local procedure and its application of English law. This meant that as the court of Abu Dhabi, the administration could be recognized in local courts and, in theory, in Dubai, Sharjah and other emirates.
“The company eventually disclosed that it had a much larger debt to its creditors than had been publicly disclosed. It went from $2 billion to approximately $7 billion,” East told Law.com International. .
In identifying ADGM’s Offshore Free Zone as the opportune forum from which to administer the insolvency of NMC’s UAE Group, a fanciful footwork allowed Quinn Emanuel to ask UAE onshore and offshore lawmakers to bring amendments to their respective insolvency laws.
A “revolutionary” pre-insolvency group corporate restructuring then allowed 36 NMC Group companies incorporated onshore in three different emirates in the UAE to continue in the ADGM.
ADGM’s administration order was subsequently successfully recognized by the onshore courts of the United Arab Emirates, resulting in the stay of several proceedings against the NMC Group, as well as recognition by the Dubai International Financial Center and the English courts, and a $325 million funding order for Tidal Group, the firm said.
Quinn Emanuel partnered with Kirkland & Ellis, where East made a stint earlier, to design the terms of the company’s deed of arrangement. In the group’s first restructuring to gain creditor approval in the UAE since Dubai Drydocks World in 2017, creditors gave the deeds “overwhelming support” in September 2021, leading to the group’s successful restructuring and when he leaves the administration.
“Our representation has evolved from representing the ADCB in UK administrative proceedings to representing administrators in ADGM administrations,” East said.
He added that Muddy Waters, the US short seller who initially laid bare the seriousness of events within the NMC group, was right.
“They were much more right than they ever thought, about a gigantic ongoing fraud,” he said.
“There are bad actors. It wasn’t just bad corporate management. I think you can assume that the people who fled the UAE, before the directors were appointed, have questions to answer. »
He said the missing money was collected on the back of the company, but not for the company.
“It’s a great business. It was positive cash flow. It is not in itself a company in difficulty.
East admitted that NMC founder BR Shetty had been “pretty unrelated to the work we did”.
“The main task was to save the company from the terrible position it was in. To be honest, we don’t know where he is.”
According to East, “on a consolidated basis, approximately 95% of creditors eligible to vote were in favor.”
He added: “There was a high degree of approval from stakeholders. Everyone realized that there was no alternative to what we were offering.
And so for the UAE, another case of near disaster, followed by redemption.