Healthcare company NMC Health has withdrawn its London lawsuit seeking nearly £2 billion ($2.7 billion) from auditor EY for allegedly negligent audits, a court order has shown.
NMC was a FTSE 100 company when it collapsed in 2020 after disclosing more than $4 billion in hidden debt. The administrators of NMC – founded in the UAE by Indian tycoon BR Shetty – sued over audits from 2012 to 2018, when EY gave an unqualified opinion that the company's accounts were accurate.
NMC was seeking £1.94 billion, largely relating to undisclosed guarantees, plus interest. The trial of its lawsuit began at London's High Court in May and concluded in October.
But before the court could rule on the case, NMC withdrew its claim, to a court order dated January 29 showed. The order said "there shall be no order as to the damages claimed or as to the costs of the claim", but offered no further details.
“NMC Health has resolved the claim it brought against its former statutory auditor, Ernst & Young," the healthcare company's administrators Alvarez & Marsal said in a statement. "The claim has been resolved without admission of liability. The settlement agreement and its terms otherwise remain confidential.”
EY confirmed it was "no longer in dispute with the administrators of NMC Health".
Alvarez & Marsal had accused EY, one of the world's "Big Four" auditors and formerly known as Ernst & Young, of negligently failing to spot a major fraud by NMC's main shareholders. But EY argued at last year's trial that it was NMC's own senior personnel who perpetrated the fraud and manipulated its accounts, hiding it from EY.
NMC Health PLC listed in London in 2012 and joined the FTSE 100 in 2017, before short-seller Muddy Waters questioned its finances in December 2019, sending NMC's shares tumbling by almost a third in a day.
