Payouts to the debt holders of UAE’s largest healthcare provider, NMC could be put on hold after the company filed a lawsuit against Dubai Islamic Bank (DIB) to place securities claimed by DIB under its administrator Alvarez & Marshal (A&M). NMC’s operating businesses were placed under administration of Abu Dhabi’s International Financial Center (ADGM) after the revelation of $4bn in hidden debt. In case the securities are put under A&M, these could be used to pay creditors other than DIB. The lawsuit is seen as a counter to another lawsuit filed by DIB in the Dubai courts through which it is looking to safeguard its $400mn exposure to NMC for a loan granted against insurance receivable collateral. Since NMC and DIB have filed the cases in different courts, this could lead to complications in the restructuring process as the two lawsuits have resulted in pitting two legal systems within UAE against each other. UAE has both onshore and offshore legal jurisdictions. While the onshore courts use UAE laws, the ADGM and financial free zone Dubai International Financial Centre (DIFC) courts follow the English system. According to a Reuters source, “You have a situation where you have facilities granted by banks secured by security – for example assignment of receivables – governed by the UAE, onshore law…and then you have the companies redomiciling in ADGM, in an English style process.”

NMC’s bonds continue to trade at distressed levels. Its 5.95% 2023s were up 0.21 to trade at 10.82 while its 1.875% 2025s were trading stable at 13.45 cents on the dollar on the secondary markets.
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