A London court on Monday overturned Pramod Mittal's agreement with creditors, under which he agreed to pay 0.2 per cent of his total debts of more than $2 billion. Pramod is the younger brother of steel tycoon Lakshmi Mittal, news agency Reuters reported.
In June 2020, Moorgate Industries UK Limited, formerly known as Stemcor UK Limited, filed for bankruptcy due to a debt of about $170 million owed by Pramod Mittal.
In October 2020, the businessman and his creditors entered into an individual voluntary arrangement (IVA).
In court documents filed earlier this month, Joseph Curl, representing Moorgate, stated that Mittal's debts increased by a factor of more than 40 to nearly $2.7 billion shortly before creditors voted on the IVA proposal.
Curl stated that loans to four of Mittal's 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 were made for a "fraudulent purpose."
However, in a ruling, Judge Nicholas Briggs stated that "there was a material irregularity at the meeting of creditors convened to consider [Mittal's] proposal," and revoked the IVA.
"Mr Mittal is disappointed with the decision and intends to appeal," Mittal's lawyer said in an emailed statement to Reuters.
"He has already informed the judge of his intention and there will be a further hearing in the next few weeks to consider his application for permission to appeal."
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