Former steel magnate Pramod Mittal used "sham" loan agreements with companies he controlled to wriggle out of bankruptcy by paying just a tiny fraction of his debts, a UK firm alleged in a London court.
Moorgate Industries UK Ltd. is seeking more than 140 million pounds ($161 million) from Mittal, the younger brother of one of the world's richest men Lakshmi Mittal. Moorgate urged the court to revoke a two-year-old approval to an arrangement that allowed Mittal to pay 0.2 per cent of amounts owed.
Inauthentic debt worth over 2 billion pounds from "friendly creditors” helped him "swamp" through the required votes from lenders for the payment arrangement, Moorgate's lawyers claim.
"The Loan Agreements and Assignments relied upon by the supporting creditors are inauthentic or 'sham' documents which have been created, backdated, signed and witnessed in order falsely to give the impression of the existence of genuine debts owed by Mr. Mittal," Moorgate alleges, according to a summary in Mittal's own court filings.
Mittal's lawyers said he denies the allegations and insists that the loans were genuine and there was no evidence that he controlled the companies he owed money to.
"There are no indications” on the loan agreements that they "are not what they purport to be," Mittal's lawyer Ian Mayes said in the submissions to court.
Mittal and Moorgate's lawyers didn't respond to emailed requests for further comment.
Mittal, who once controlled steel businesses in several countries, valued his assets at less than 150,000 pounds in 2020 and agreed to borrow about $6 million from his son to pay off creditors, according to written arguments given in court.
Rebuffing Moorgate's allegation, Mittal's lawyer said there was nothing suspicious about his son helping "to put an end to his father's bankruptcy."