NMC Health PLC

The Joint Administrators of a collapsed healthcare group are suing EY, the group’s auditors, for negligence for allegedly failing to spot red flags in the group’s financial statements.

NMC Health PLC is the ultimate holding entity of a group of healthcare entities. The company was listed on the official list of the FCA and the London Stock Exchange until it was delisted on 28 April 2020.

In early 2020, the company made a series of announcements to the market disclosing borrowings totalling in excess of $4.1 billion, the existence of a suspected fraud and a number of changes of Board members, including the removal of the CEO.

Richard Fleming, Mark Firmin and Ben Cairns of Alvarez & Marsal were appointed Joint Administrators on 9 April 2020.

Following their appointment, the Joint Administrators began investigating potential claims against EY and the former directors of the company.

On 28 April 2022, the Joint Administrators filed the particulars of a claim against EY. The claim, which is for approximately $2.7bn, alleges audit negligence with respect to EY’s work with the company between 2012 and 2018.

EY is under investigation by the Financial Reporting Council over its work at the company and is also a defendant in an $8 billion claim filed in New York by the company’s founder. It submitted a defence denying all liability on 14 October 2022.

Earlier this week, the parties were in Court over a request by the Joint Administrators to force EY to disclose details of its finances or insurance coverage ahead of EY’s planned global split. The Joint Administrators said they were concerned that the split may affect EY’s ability to pay any future judgment in the case.

The Court declined to make the order, but did tell EY to give the Joint Administrators approximately 4 weeks’ notice of any vote on whether to split its audit and consulting businesses.

The Joint Administrators have been assisted by DLA Piper and Quinn Emanuel Urquhart & Sullivan. Their latest Progress Report can be found HERE.