June 15, 2023

RWK Goodman Successfully Represents Four Banks in Landmark $133 Million Dispute against Essar Group’s Cypriot Subsidiary

RWK GOODMAN press release

We are pleased to have represented four Banks in a USD $133 million dispute against a Cypriot subsidiary of India-based, Essar Group. RWK Goodman acted for Canara Bank, Indian Overseas Bank, SBI (Mauritius) and AfrAsia Bank in a dispute against a defaulting borrower and the guarantor in High Court proceedings in London.

The four lenders had entered into a syndicated loan facility with a fifth lender totalling some USD $250 million including interest with IDH International Drilling Holdco Ltd (IDH). The guarantor of the facility was a Cayman based subsidiary of the Essar Group, known as Essar Global Fund Limited. The loan arrangement had been entered into as a working capital facility to support the company and its business of trading vessels and drilling rigs. The syndicated arrangement also had a further Indian Bank acting as a security trustee and agent based out of the DIFC (the Dubai International Financial Centre).

The loan given by the syndicated lenders to IDH was secured, amongst other things, by a guarantee, a charge over a rig and a further charge over fixed currency convertible bonds. All of the loan and security documentation was governed by English law.

The loan facility ran its course in September 2015 and the borrower and guarantor failed to repay the total facility amount to the syndicated group of lenders. After several years of forbearance and attempted refinancing and discussions, formal demands were issued by the four lenders for repayments of the loan amounts, interest and legal costs, which were followed by a claim being issued in the Commercial Court of The London High Court in August 2021.

The claim proceeded to trial which was due to be heard this year, but not without a contested position adopted by the borrower and guarantor, in which they asserted various technical arguments relating to limitation, the ability of the agent and the Banks to commence the claim, and attempted insolvency proceedings in Cyprus in order to appoint an ‘Examiner’ of the Cypriot entity, which could have had an impact on the English High Court proceedings. The attempted examinership in Cyprus would have been the first of its kind, that being a tool frequently, but typically unsuccessfully, used in Cyprus.

Ultimately, a successful recovery was made for the Banks through a negotiated settlement.

Our team included Head of Banking & Finance Sector and the London Disputes Team, Milan Kapadia, who has acted for Indian Banks for several years in various high profile non-performing loan and insolvency disputes, and other members of the Banking Team including Jack Pestill (Senior Associate), Chloe Howes (Associate), Clare Wheatley (Partner – Corporate), Jack Webb (Senior Paralegal), all based out of the London Office.

RWK Goodman is also representing another Bank in a dispute against Nirav Modi, a former Indian jeweller tycoon, who is accused of a USD $2 billion fraud against the Punjab National Bank in India.

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