A London court on Monday overturned Pramod Mittal’s settlement with creditors, under which he agreed to pay 0.2 per cent of his total debt of over $2 billion. News agency Reuters reported that Pramod is the younger brother of steel tycoon Lakshmi Mittal.
In June 2020, Moorgate Industries UK Limited, formerly known as Stemcor UK Limited, filed for bankruptcy due to debts of approximately $170 million owed to Pramod Mittal.
In October 2020, the businessman and its creditors entered into an Individual Voluntary Arrangement (IVA).
In court documents filed earlier this month, Joseph Curl, representing Moorgate, said Mittal’s debt increased by more than 40% to about $2.7 billion shortly before creditors voted on the IVA proposal.
Curl said that Mittal’s loans to four creditors had “absolutely extraordinary” compound interest rates, with interest accounting for more than 97% of his total debt.
Mittal’s lawyers argued that Moorgate lacked evidence to support its claims that the loans were a “sham” or made for “fraudulent purposes”.
However, in a ruling, Judge Nicholas Briggs said that “there was a material irregularity in the meeting of creditors convened to consider [Mittal’s] offer,” and canceled the IVA.
Mittal is disappointed by the decision and intends to appeal, Mittal’s lawyer said in an emailed statement to Reuters.
“She has already informed the judge of her intention to appeal and there will be further hearings over the next few weeks to consider her application for leave to appeal.”