EY hit with £2bn lawsuit over NMC Health audits

Big Four auditor EY has been hit with a lawsuit by the administrators of collapsed FTSE-100 healthcare business NMC Health.

The claim could be valued at more than $2.5bn, Sky News reported.

The administrators of NMC Health — which collapsed in 2020 amid accusations of fraud — filed the suit against EY UK in the Commercial Court in London on 28 April, according to court filings seen by Financial News.

The claim is likely to be valued at at least $2.5bn, but could rise to hit $3bn, Sky reported.

READ Investigation launched into EY audit of NMC Health

A spokesperson for EY said the firm was aware of the lawsuit and said the firm would “defend the claim vigorously.”

NMC Health collapsed in April 2020 after a turbulent few months during which its chief executive was sacked and the group discovered $4.3bn more debt than was previously accounted for.

EY had audited NMC from its listing in London in 2012 until its demise eight years later.

READ KPMG hit with £1.3bn claim over Carillion collapse

The Financial Reporting Council, the UK’s audit watchdog, said in May 2020 that it was investigating the financial statement produced by the Big Four firm for NMC for the year ending December 2018.

Restructuring firm Alvarez & Marsal is acting as administrator to NMC Health and law firm Quinn Emanuel Urquhart & Sullivan is bringing the claim against EY on its behalf.

A spokesperson for Alvarez said: “The issues that we found at NMC Healthcare following our appointment were broad, complex and multi-layered. As part of our wide ranging investigation into the situation, we have looked at the role of the auditors and have now launched formal legal proceedings against EY for audit negligence with regards to its work with the company between 2012 and 2018. As administrators, we have an obligation to maximise returns for creditors and this action is part of those wider efforts.”

EY’s fellow Big Four audit firm KPMG is facing a lawsuit in excess of £1.3bn from the liquidators of failed outsourcing company Carillion, which it had audited. Quinn Emanuel is also the law firm working to bring that claim.

Quinn Emanuel partners Richard East, Nick Marsh and Aidan O‘Rourke are the lead lawyers on the NMC Health claim, according to a person familiar with the situation. 

East is US law firm Quinn’s London managing partner and was named as one of Financial News’ 50 Most Influential lawyers for 2022.

To contact the author of this story with feedback or news, email James Booth

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