UAE based hospital operator NMC Health which has been battered by accusations of a multi-billion dollar scam has registered bankruptcy protection in the United States where it faces the most number of legal disputes with respect to the recent revelation of hidden debts.
The organization, which had accumulated $6.6 billion in debt, was put on administration by a UK court in April as a result of an appeal filed by ADCB Bank which was one of the major lenders to the organization.
One of the largest networks of hospitals and clinics in several countries, NMC Health is seeking recognition of cases in the United Kingdom and will allow administrators to “maximize the value of assets owned in the United States, including certain medical practices,”.
The company, which was removed from the London Stock Exchange in the middle of the increasing commotion, said in US legal papers that some stockholders had launched prosecutions against it.
The bankruptcy filing indicates $ 1,873 billion in total liabilities and “possible deceitful exercise leading to the UK course, including the identification of at least $ 2.7 billion in previously undisclosed amenities for the NMC Group.”
NMC Health, which runs private medical offices in 19 countries with its principal focus in the Middle East is also facing either dissolution or liquidation.
Administrators Alvarez and Marsal Europe stated that it would not be reasonable to conclude the consequence of the procedure till all examinations of the organization have proceeded and the position of responsibility placed.
The UAE-based lender ADCB which has an exposure of Dh3 billion has also begun a criminal case against six senior executives, including founder and former chairman BR Shetty and former chief executive Prasanth Manghat on deception and simulation charges.
Several law firms in the United States had launched a legal battle against a hospital operator. The law firms had filed a class-action lawsuit for infringing some of the rules of the Securities Exchange Act of 1934 and a rule declared there by the U.S. Securities and Exchange Commission.
Investors including Bernstein Liebherd, Bronstein, Gewirtz & Grossman, Gainey, McKenna & Egleston, Pomerantz Law and Wolf Hadenstein Adler Freeman & Herz, and Schall Advokatfir have appointed law firms that are actively involved in listing the lawsuit claiming securities fraud. The law firms have been encouraging investors who have lost $100,000 or more on NMC Health American Depository Receipts to join the trial.
According to a charge, NMC Health issued inaccurate and deceiving statements to the market. “NMC Health failed to maintain effective internal control. The company conducted several related party transactions. The company underestimated its debt while exaggerating its cash-on-hand.”
The law firms denoted that NMC Health’s biggest stockholders did not correctly describe their interest in the business, which did not examine the control of these important stockholders and therefore could not implement its association arrangement with them. “Based on these facts, the company’s public statements were false and materially misleading throughout the class period. As the market learned the truth about NMC Health, investors suffered injuries.”
The US prosecutions make numerous charges, including the company’s lack of sufficient internal control, the conduct of “uncovered and extensive” related party transactions, and its debts being significantly underestimated while the cash balance was distorted. At least one filing claims that the company’s previous statements “were essentially deceptive and misleading and/or lacked a rational basis.”