The administrators of troubled hospital operator NMC Health PLC filed a $2.7 billion lawsuit in London over concerns that EY would not be able to make payments if it lost the case, bringing EY's plans to separate its auditing and consulting arms into the legal fray.
Although reports this month suggested the separation of the auditing and consulting businesses is likely to be put on hold, the company, formerly known as Ernst & Young, has been planning to do so.
Court documents made public for a hearing at London's High Court on Monday seemed to confirm the pause. EY is one of the "Big Four" auditors in the world, along with Deloitte, PwC, and KPMG.
"NMC will be aware from press coverage … that the potential separation under consideration is paused," the document said.
It is crucial that we get this transaction right because it will serve as the blueprint for reshaping the profession, according to a spokesperson for EY.
"We remain committed to the strategic rationale that underpins Project Everest (the proposed separation) and believe that a deal can and should be done."
NMC requested a court order requiring EY to disclose the specifics of the potential split after filing a lawsuit against the accounting firm last year for failing to notice that NMC's financial statements were materially misstated between 2012 and 2018.
In court documents, NMC's attorney Simon Salzedo stated that the company is concerned that the proposed separation would "reduce EY's assets and future income" and that, if NMC is successful at trial, EY would not be able to pay $2.7 billion.
EY, who denies any duty-related wrongdoing toward NMC, asserts that it has already agreed to give NMC pertinent information regarding a potential split.
The application is "premature and unnecessary," according to EY's attorney Thomas Plewman, given that the proposed separation has been put on hold.
Despite not intending to issue a court order, Judge David Foxton stated on Monday that EY should give NMC notice four weeks prior to any partnership vote on the division of EY's business.
The trial date was tentatively set by the judge for April 2025.
When short-seller Muddy Waters questioned NMC's financials in late 2019, which caused a sharp decline in its share price, NMC—which used to be listed in London—ran into trouble. The following year, after disclosing more than $4 billion in hidden debt, it entered administration.
(Source:www.latestly.com)
Although reports this month suggested the separation of the auditing and consulting businesses is likely to be put on hold, the company, formerly known as Ernst & Young, has been planning to do so.
Court documents made public for a hearing at London's High Court on Monday seemed to confirm the pause. EY is one of the "Big Four" auditors in the world, along with Deloitte, PwC, and KPMG.
"NMC will be aware from press coverage … that the potential separation under consideration is paused," the document said.
It is crucial that we get this transaction right because it will serve as the blueprint for reshaping the profession, according to a spokesperson for EY.
"We remain committed to the strategic rationale that underpins Project Everest (the proposed separation) and believe that a deal can and should be done."
NMC requested a court order requiring EY to disclose the specifics of the potential split after filing a lawsuit against the accounting firm last year for failing to notice that NMC's financial statements were materially misstated between 2012 and 2018.
In court documents, NMC's attorney Simon Salzedo stated that the company is concerned that the proposed separation would "reduce EY's assets and future income" and that, if NMC is successful at trial, EY would not be able to pay $2.7 billion.
EY, who denies any duty-related wrongdoing toward NMC, asserts that it has already agreed to give NMC pertinent information regarding a potential split.
The application is "premature and unnecessary," according to EY's attorney Thomas Plewman, given that the proposed separation has been put on hold.
Despite not intending to issue a court order, Judge David Foxton stated on Monday that EY should give NMC notice four weeks prior to any partnership vote on the division of EY's business.
The trial date was tentatively set by the judge for April 2025.
When short-seller Muddy Waters questioned NMC's financials in late 2019, which caused a sharp decline in its share price, NMC—which used to be listed in London—ran into trouble. The following year, after disclosing more than $4 billion in hidden debt, it entered administration.
(Source:www.latestly.com)
