Abu Dhabi-based NMC Health has been placed into administration by a UK court to protect the assets of the Middle East’s largest health-care provider.

The court will now appoint administrators to oversee the whole management and operations of the group, reported Gulf News.

The existing Board of Directors of NMC "cease to have decision-making powers with immediate effect". These powers transfer to the administrators who are responsible for the day-to-day running of NMC, said the report, citing a NMC statement.

But "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," it added.

A court in the UK came into the picture because NMC Health is listed on London Stock Exchange, and thus bound by UK rules governing public companies. It listed on the LSE in 2012.

This follows an appeal filed by ADCB with the UK court for “joint administration” of NMC Health, after it was found that the hospital operator had $6.6 billion in bank debt and was in no position to pay it off.

NMC didn’t oppose the effort by creditor, ADCB, reported Bloomberg. Judge Sebastian Prentis said there was no alternative to administration after hearing the arguments via videoconference.

Lawyer for Abu Dhabi Commercial Bank says there are concerns that the NMC Group will be unable to pay employees in the months to come and that the whole NMC Group may collapse.
“If this happens, it will imperil the health of the citizens in the UAE,” lawyer says in court filing. Bank “considers that steps must be taken now, before it is too late, to secure the company’s financial position.”

UAE banks combined have exposures of over Dh10 billion ($2.7 billion), with ADCB having the highest at Dh3.6 billion.

In a statement after the UK court ruled in favour, ADCB issued a statement: “ADCB and other key creditors have concluded that an administration process is the most suitable route to ensure a rescue and turnaround of NMC Health PLC and its subsidiaries.

“And to assure continuity of operations for patients, healthcare workers and other stakeholders. An administration is a process designed for a rapid business recovery and is therefore distinct from liquidation, it added.

"The true picture of the financial difficulties faced by NMC only became apparent through a series of announcements by the Company since February 2020, including the uncovering of over $4 billion of previously undisclosed debts," ADCB said in a statement immediately after the UK court order.

"Contrary to the information the Group provided to ADCB and in breach of the various loan covenants and commitments, following these revelations, the Bank learned that it was among over 80 major regional and international financial institutions that extended credit to the Group," it added.