ADGM Court Holds B.R. Shetty and Prasanth Manghat Liable for Fraudulent Trading

The Abu Dhabi Global Market's Court of First Instance has held NMC Healthcare founder B.R. Shetty and former chief executive Prasanth Manghat liable for fraudulent and wrongful trading, finding that both men knowingly took part in a deception that masked the hospital operator's finances for eight years.

Justice Sir Andrew Smith's judgment, dated Nov. 5 and issued on Thursday, sets $5.397 billion as the starting point for deciding how much the two men must contribute under the fraudulent trading claims. That figure is not a payment order. A further hearing will settle the amounts and the other matters left open.

The court traced the conduct to the period between April 2, 2012, and April 9, 2020, when assets were misappropriated from NMC Group companies and the group's true position was concealed, including substantial borrowings that were never disclosed to those relying on its accounts.

Shetty, the court found, knowingly received large sums moved out of the group improperly and used them to acquire assets. He also failed to disclose securities that backed his personal financing facilities, allowed misleading financial statements to be published, and helped keep the group's borrowings from auditor Ernst & Young.

Manghat knowingly helped channel misappropriated funds to Shetty, to himself and to others, according to the judgment. He was aware that the financial statements used to disguise those transactions were false, and he took part in hiding the borrowings from Ernst & Young.

NMC Healthcare Limited, NMC Holding Limited and 34 ADGM-registered companies went into administration. The civil claims brought under UAE law by the two companies and their joint administrators were upheld.

In a separate action decided in the same judgment, Abu Dhabi Commercial Bank established claims against Manghat under Articles 282 and 285 of the UAE Civil Code and Article 84 of the UAE Commercial Companies Law of 2015. The court held the bank entitled to recover damages tied to outstanding liabilities of about $1.022 billion, along with lost profits of about $169 million, subject to adjustments.

For creditors, the ruling turns a long administration into a claim with a number attached, though the $5.397 billion starting point will move once the mechanics of contribution are argued. The ADCB limb matters beyond this case: it shows UAE company law claims running alongside an insolvency process and reaching a director personally.

A further hearing will address the consequential issues, including how the contribution figures are to be calculated.