The Abu Dhabi Global Market (the “ADGM”) courts have recently handed down their decision in NMC Healthcare Limited & Others v Shetty & Others ([2024] ADGMCFI 0007). The decision deals with several important principles in relation to fraudulent/wrongful trading liabilities under ADGM law. Given the ADGM re-domiciliation (or continuation) regime, enabling companies incorporated elsewhere to be redomiciled to ADGM with relative ease, the decision is likely to be of interest beyond the borders of the ADGM.

Since the global financial crisis, the Middle East restructuring and insolvency market has come a long way. Having sought to reduce their economies' dependency on oil revenues and become more attractive to international investors, the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA) in particular have significantly developed the restructuring and insolvency toolbox available to creditors and debtors alike.

Much Anticipated Extraterritoriality Ruling Could Have Far-Ranging Implications

District Court decides that in a broker-dealer liquidation governed by SIPA, where a trustee seeks to recover funds paid to the defendant under Sections 548(a) and 550(a) of the Bankruptcy Code, which impose liability for fraudulent conveyances where the defendant lacked good faith in receiving the funds: (i) the defendant’s good faith is evaluated under a subjective willful blindness standard, and (ii) to survive a motion to dismiss, the trustee bringing the fraudulent conveyance claims must plead facts sufficient to establish the defendant’s lack of good faith.