DUBAI: The UAE’s largest private healthcare provider NMC is suing a Dubai bank in Abu Dhabi courts, three sources said and a court document showed, in a dispute that could complicate the company’s multibillion-dollar debt restructuring and potentially delay payouts to creditors.
The healthcare company ran into trouble last year after the disclosure of more than $4 billion in hidden debt.
Its UAE operating businesses were placed into administration in the courts of Abu Dhabi’s international financial centre ADGM. Claims from creditors to date amount to $6.4bn, the company has said.
The legal action by NMC’s administrator against Dubai Islamic Bank (DIB) comes after DIB filed lawsuits in Dubai. The lawsuits pit UAE’s different legal systems against one another and risk complicating the restructuring.
NMC’s lawsuit seeks to give its administrators, Alvarez & Marsal, power over securities claimed by DIB and possibly use them to pay other creditors, the sources and the court document seen by Reuters showed.
Pending a full account of the receivables to the administrators and payment by DIB of the proceeds, “the joint administrators shall be entitled to withhold any distribution or payment that would otherwise be due to DIB from the estate of the companies, or other property in the hands of the joint administrators,” the court document said.
That could leave DIB, which has an exposure of over $400 million to NMC, out of pocket. NMC had secured loans from DIB using collateral known as insurance receivables, which relate to payments by insurance companies for medical treatment.
DIB has already sought rights over those securities in cases filed in Dubai, three sources close to the matter said.
ADGM told Reuters it does not comment on ongoing court proceedings. Alvarez & Marsal, which has been appointed as administrator of NMC, declined to comment. DIB did not respond to a request for comment.