NMC Healthcare Ltd & Ors v Shetty & Ors [2024] ADGMCFI 0007 (8 July 2024)

NMC Healthcare Ltd & Ors v Shetty & Ors [2024] ADGMCFI 0007 (8 July 2024)

Sections 251 and 253 of the Insolvency Regulations 2022 apply to fraudulent trading, and section 252 applies to wrongful trading, carried on by a company prior to its continuance in the ADGM. Claims may be brought under these sections in respect of conduct before the enactment of the predecessor regulations. A claim may be brought under sections 251 and/or 252 absent a sufficient connection between the defendant and the ADGM; if a connection is required, the facts pleaded by the Claimants would suffice.

Citation
[2024] ADGMCFI 0007
Parties
Claimant/applicant: NMC Healthcare Limited (in administration) (subject to a deed of company arrangement); Claimant/applicant: NMC Holding Limited (in administration); Claimant/applicant: Richard Dixon Fleming (in his capacity as Joint Administrator of the First and Second Claimants/Applicants); Claimant/applicant: Benjamin Thom Cairns (in his capacity as Joint Administrator of the First and Second Claimants/Applicants); Defendant/respondent: Bavaguthu Raghurama Shetty; Defendant/respondent: Prasanth Manghat; Defendant/respondent: Bank of Baroda
Jurisdiction
United Arab Emirates
Judgment Date
08 July 2024
Procedural Posture
Commercial and Civil Division, Court of First Instance, ADGM / Preliminary Issues Determination
Outcome
Preliminary issues determined in favour of the Claimants. Sections 251, 252, and 253 of the Insolvency Regulations 2022 apply to conduct prior to ADGM continuance and prior to the enactment of predecessor regulations. Sufficient connection with ADGM is not mandatory.
Legal Topics
Fraudulent Trading, Wrongful Trading, Statutory Interpretation, Retrospective Legislation, Jurisdictional Connection, Continuance of Companies, Director Liability
Insolvency Company Law Commercial Law Civil Procedure Fraudulent Trading Wrongful Trading Statutory Interpretation Retrospective Legislation +3 more

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Parties

NMC Healthcare Limited (in administration) (subject to a deed of company arrangement)

Claimant/applicant

NMC Holding Limited (in administration)

Claimant/applicant

Richard Dixon Fleming (in his capacity as Joint Administrator of the First and Second Claimants/Applicants)

Claimant/applicant

Benjamin Thom Cairns (in his capacity as Joint Administrator of the First and Second Claimants/Applicants)

Claimant/applicant

Bavaguthu Raghurama Shetty

Defendant/respondent

Prasanth Manghat

Defendant/respondent

Bank of Baroda

Defendant/respondent

Procedural Posture

Commercial and Civil Division, Court of First Instance, ADGM / Preliminary Issues Determination

Legal Issues

  1. 1 Applicability of sections 251 and 253 of Insolvency Regulations 2022 to fraudulent trading before ADGM continuance
  2. 2 Applicability of section 252 of Insolvency Regulations 2022 to wrongful trading before ADGM continuance
  3. 3 Applicability of sections 251 and 252 to conduct before enactment of Insolvency Regulations 2015

Ratio Decidendi

Sections 251 and 253 of the Insolvency Regulations 2022 apply to fraudulent trading, and section 252 applies to wrongful trading, carried on by a company prior to its continuance in the ADGM. Claims may be brought under these sections in respect of conduct before the enactment of the predecessor regulations. A claim may be brought under sections 251 and/or 252 absent a sufficient connection between the defendant and the ADGM; if a connection is required, the facts pleaded by the Claimants would suffice.

Court Disposition

Preliminary issues determined in favour of the Claimants. Sections 251, 252, and 253 of the Insolvency Regulations 2022 apply to conduct prior to ADGM continuance and prior to the enactment of predecessor regulations. Sufficient connection with ADGM is not mandatory.

Orders

  • Parties invited to make submissions about costs, permission to appeal, and consequential matters within 21 days.
  • Order giving effect to this judgment to be drafted by the Claimants' representatives.