EWHC 1550 (Ch)
This case concerned bankruptcy proceedings against Pramod Mittal, the brother of Lakshmi Mittal, brought by Moorgate Industries UK Ltd, in respect of petition debt of just under £140 million.
The debt arose following an LCIA arbitration award made in the petitioner’s favour in 2017 against a Bosnian company, the debts of which had been guaranteed by Mr Mittal and an Isle of Man registered company (presently in liquidation). Moorgate brought proceedings in the Commercial Court seeking to enforce the guarantee and obtained an award against Mr Mittal and the Isle of Man company (for some US $166 million). Following those awards, Mr Mittal entered into a settlement agreement with Moorgate, under which he made payments to Moorgate in part-satisfaction of a reduced sum agreed to under the settlement agreement. After he failed to make one of the payments by the agreed deadline, Moorgate initiated bankruptcy proceedings.
The case was long-running. The bankruptcy proceedings were brought under a petition dated 8 February 2019. Mr Mittal filed a Notice of Opposition on a number of grounds, including Mr Mittal’s contention that there had not been proper service on him of the petition. From May to October 2019, a number of hearings were held in relation to that petition, and various rounds of witness evidence were filed, including on the disputed issue of service. Very shortly before a further directions hearing in October 2019, the petitioner sought to withdraw the petition and, after negotiations, agreed to pay Mr Mittal’s costs of the first petition of some £66,000. Shortly thereafter, Moorgate initiated proceedings for a second bankruptcy petition, claiming to have set off the costs order in Mr Mittal’s favour against costs orders given in the Commercial Court against Mr Mittal and the Isle of Man company.
The second petition was due to be heard in March 2020, but owing to the Covid-19 pandemic, and in particular the effect of the lockdown restrictions on Mr Mittal’s ability to participate in the hearing, the hearing was adjourned until May 2020. At the hearing, ICC Judge Burton considered (i) whether Moorgate was entitled to the set off it claimed, and if not, whether that meant that the proceedings should be stayed pending payment of the costs order by Moorgate, (ii) whether, properly construed, the settlement agreement, which had not been terminated by Moorgate, obliged Moorgate to continue to seek payment from the principal debtor (the Bosnian company against whom the LCIA award had been made), (iii) whether errors in the petition meant that a bankruptcy order could not be made at that hearing, and (iv) whether, notwithstanding Mr Mittal’s other grounds of appeal, there was a reasonable prospect of the petition debt being paid in full within a reasonable time.
The ICC Judge reserved judgment, which was handed down on 19 June 2020, holding (i) that Moorgate was entitled to equitable set off (and was further not persuaded that if Moorgate was not entitled to a set off, it would be appropriate to grant a stay), (ii) that the settlement agreement did not preclude Moorgate from proceeding against Mr Mittal for the full debt under the Commercial Court’s order, (iii) that although there was a defect in the petition (in that interest accruing after the statutory demand had been claimed in the petition), it was capable of being remedied by the Court, and (iv) the Court was not satisfied on the evidence that there was a reasonable prospect of the petition debt being paid in full within a reasonable time. Having dismissed Mr Mittal’s grounds of opposition, the Court made a bankruptcy order. Mr Mittal is pursuing an appeal.
Stephen Ryan was instructed by Collyer Bristow for Mr Mittal in respect of the first and second petitions, and is instructed in relation to Mr Mittal’s intended appeal.