Pramod Mittal's creditor seeks to revoke his IVA in the UK high court

LONDON: Billionaire steel magnate Lakshmi Mittal's younger brother Pramod Mittal may have hoped he could escape an investigation of his assets when he entered into an IVA (individual voluntary arrangement) with his creditors but now faces a legal challenge to the IVA in the London high court, with one of his creditors seeking to revoke the IVA.
Moorgate Industries UK Limited, to whom Mittal owes £140 million plus interest, who brought the bankruptcy petition against Mittal, 66, in the first place, has applied to get the IVA revoked for “material irregularities”.
The IVA was approved by 75% of the value of 20 creditors at a virtual creditors’ meeting on October 26, 2020. Moorgate voted against it but was outmatched by the debt value of the other creditors who voted in favour of the IVA.
Moorgate’s case is that four of the creditors in the IVA are not legitimate and should not have been allowed to vote. Moorgate is specifically challenging the votes of Direct Investments Limited (DIL),, which claims to be owed £972 million; Pankaj Agarwal, as assignee of Ispat Steel Holdings, who claims to be owed £533 million; Rupam Poddar as assignee of Interworld Steel Industries Pte, who claims to be owed £3.8 million; and Smijithlal Sathyanandan as assignee of Global Coke & Energy FZE, who claims to be owed £54.8 million.
Moorgate alleges DIL is “associated” with Mittal and should not have been allowed to vote as a non-associate in the IVA vote. Joseph Curl KC, representing Moorgate, said, “It is clear from the Prasan Trust that the bankrupt Pramod Mittal is entirely in control of the trust and the assets underlying it, including DIL.” He also pointed out that Mittal had claimed he could get funds from DIL when fending off the bankruptcy petition and all of a sudden DIL had become a creditor in the IVA.
Curl told the insolvency and companies court that these four creditors were charging Moorgate 4% compound interest per month on their debts, meaning that what Mittal owed them had increased by more than 43 times compared to what the official receiver had been told and was now 2.3% principal and 97.3% interest. Their debt was bigger than his, meaning their votes had more weight at the creditors’ meeting. “Having been easily susceptible to being outvoted by Moorgate on an IVA proposal, the bankrupt’s friendly creditors would now swamp it,” Curl said.
In the IVA Mittal had valued his assets as not exceeding £150,000 and proposed his son, Divyesh Mittal, would advance $5.7 million, producing a return to creditors of less than one-fifth of one penny in the pound.
Mittal, an Indian citizen who lives in Mayfair, London, was declared bankrupt by the London high court on June 19, 2020 after failing to settle a judgment debt against him of £140 million plus interest owed to Moorgate.
Ian Mayes KC, representing Mittal, said the allegations of bad faith are without substance and should be rejected. Chief ICC Judge Briggs reserved judgment.