The high-stakes £2 billion legal battle against professional services giant EY concerning its auditing of former London-listed healthcare provider NMC Health has been dramatically withdrawn from the High Court. This follows a confidential settlement agreement reached between the collapsed company's administrators and the Big Four auditor, avoiding a potentially damaging judgment.
Background to the Collapse and Legal Action
Private hospital operator NMC Health Plc, which was headquartered in the United Arab Emirates but listed on the London Stock Exchange, entered administration in April 2020. The company was subsequently delisted that same month following the emergence of fraud allegations. At its zenith in August 2018, the group had achieved a market valuation of approximately £8.6 billion and was a constituent of the prestigious FTSE 100 index.
EY served as the statutory auditor for NMC Health from 31st December 2012 right up until the company was placed into administration on 9th April 2020. The administrators appointed to handle the collapse, Alvarez & Marsal, initiated the substantial £2 billion claim against EY in the London High Court, alleging the auditor had been "grossly negligent" and had failed in its most fundamental duties.
The Trial and Sudden Withdrawal
The landmark case proceeded to trial before Dame Clare Moulder in May of last year, with proceedings continuing for an extensive fifteen weeks. According to recent administrator reports, Alvarez & Marsal had secured over £12.8 million in litigation funding specifically to cover the costs of pursuing EY.
In an unexpected development, an order was filed last Thursday confirming that NMC Health had formally withdrawn its claim. The court order explicitly stated, "there shall be no order as to the damages claimed or as to the costs of the claim." This occurred while the case was still awaiting the judge's final ruling.
Confidential Settlement Agreement
A spokesperson for Alvarez & Marsal confirmed that a confidential settlement had been agreed upon by all parties involved. The statement clarified: "NMC Health PLC has resolved the claim it brought against its former statutory auditor, Ernst & Young LLP. The claim has been resolved without admission of liability. The settlement agreement and its terms otherwise remain confidential."
EY subsequently issued its own confirmation, stating it was "no longer in dispute with the administrators of NMC Health." This resolution allows the professional services giant to avoid a public court judgment on the serious allegations of audit negligence, which could have carried significant reputational and financial consequences.
The settlement brings to a close one of the most significant audit-related legal challenges in recent UK corporate history, though the confidential nature of the agreement means the precise terms and any financial compensation remain undisclosed to the public and shareholders.
