ReportsNG
On 30 June 2023, the United States Bankruptcy Court for the Southern District of New York recognised the liquidation of Global Steel Holdings Limited in the Isle of Man as a foreign main proceeding, in case number 23-10817, on a Chapter 15 petition filed on 23 May 2023 by the company’s joint liquidators, Craig Mitchell, Mark Wilson and James Dowers. The recognition put the authority of the New York court behind the liquidators’ hunt for the assets, files and records of a steel holding company that had already been dead in law for five years, and it is one stop on a road that ends in a courtroom in Tortola, where the liquidators have filed a claim, BVIHCOM2024/0206, pleading a debt of at least US$103,229,104.04 against the very company that owned Global Steel Holdings outright.
Global Steel Holdings Limited was incorporated in the Isle of Man on 25 January 1994 as Avondale Limited, took the Global Steel name in 1996, and operated as an investment and trading company in the steel industry, with steel production investments held through subsidiaries in different jurisdictions. Its sole shareholder at the time of its liquidation was Direct Investments Limited, a company incorporated in the British Virgin Islands. Its management at liquidation was headed by Pramod Mittal, the younger brother of steel magnate Lakshmi Mittal, who sat as a director alongside Samuel Nwabuokei, Rajib Das and Vijay Kumar Singh, with Arvind Singh as secretary. ReportsNG has exclusively obtained the BVI claim form, filed on 9 May 2024, and no news outlet has reported the claim it carries.
The Creditors Who Killed The Company
The liquidation began with a creditor. On 10 May 2018, the High Court of Justice in the Isle of Man granted the winding up application of Moorgate Industries UK Limited and placed the company in provisional liquidation, and on 13 December 2018 the court appointed joint liquidators in its place. The New York petition states that at the time of its winding up the company had two major creditors, Moorgate, an English company, and the State Trading Corporation of India Limited, an Indian state entity, and that Mittal personally guaranteed the company’s debts to both of them. The BVI claim form puts the combined debts owed to the two creditors by 2017 in excess of $500 million, and states that steps were being taken by both creditors to enforce their claims. The State Trading Corporation of India later withdrew its claim against the company following a settlement which the liquidators say was effected by or on behalf of Mittal in India. An English court had already recognised the Isle of Man liquidation as a foreign main proceeding on 24 May 2019, four years before the liquidators took the same application to New York, where the company’s known United States assets were an undrawn retainer of $35,000 with its New York lawyers, Duane Morris LLP, and rights of access to files and records held by professionals in that country.
The Nigerian Debt At The Centre Of The Claim
The asset over which the Tortola claim is fought is a Nigerian debt. Global Infrastructure (Nigeria) Limited, a company incorporated in Nigeria within what the claim form calls the Mittal Corporate Structure, held the group’s Nigerian steel interests, in the concessions whose revocation by Nigeria became the long running Ajaokuta steel dispute reported across three continents. The claim form states that until at least 11 August 2017 Global Steel Holdings owned 89.5 percent of the shares in the Nigerian company, and that from 2004 the parent advanced funds to it, made payments on its behalf in connection with its investments in Nigeria, and provided management services in return for fees. Those advances, payments and fees were recorded in the Nigerian company’s annual accounts as a deposit for shares for the years ending 31 December 2004 to 31 December 2010, and the liquidators plead that the deposit was converted into a debt owed to Global Steel Holdings between 31 December 2010 and 31 December 2011.
In or around February 2008, the Federal Government of Nigeria revoked the agreements governing the two companies’ interests in Nigeria, and on or around 1 or 2 April 2008 the companies commenced arbitrations against the Federal Government, later consolidated. A tripartite mediation agreement followed on or around 23 January 2013, and the claims eventually settled in 2022 for approximately US$496 million, the settlement of the Ajaokuta dispute that was widely reported at the time. Because the converted debt belonged to Global Steel Holdings, the liquidators plead, any payment arising from that settlement would accrue for the benefit of the company and be available to pay Moorgate and the State Trading Corporation of India.
The Transfer The Liquidators Want Undone
The claim form avers that Mittal knew there was a real prospect of significant payments arising from the mediation process, and that on or around 6 April 2017, a year before the winding up, Global Steel Holdings agreed to transfer, or purported to transfer, the benefit of the Nigerian debt to Direct Investments Limited, its own BVI parent. The effect and intention of the transfer, the liquidators plead, was to move the benefit of the debt up the structure so that it would not result in realisations that would pay the company’s creditors. Direct Investments and the Nigerian company subsequently purportedly entered into a loan agreement under which a long term payable was owed by the Nigerian company to the BVI parent, as stated in accounts of Direct Investments for the year ending 31 December 2016 signed by Mittal on 12 June 2017.
The money then moved exactly as the pleading describes. Between 15 September 2022 and 21 February 2023, some US$180 million of the settlement monies were remitted to an account in the Nigerian company’s name at Reyl and Cie S.A., a bank registered in Switzerland, and the Nigerian company then made payments totalling US$179,960,000 to an account in the name of Direct Investments at the same Swiss bank. From that account, the claim form states, Direct Investments paid members of Mittal’s family. Between 19 September 2022 and 17 July 2023, the payments pleaded are £3,260,114.04 to Sangeeta Mittal, £8,105,000 and US$1,080,077.58 to Vartika Mittal, £2,777,500 and US$500,077.58 to Shristi Mittal, and £2,644,816.83 and US$500,077.58 to Divyesh Mittal.
Receivers were appointed over Direct Investments by order of the BVI High Court on 26 July 2023 in proceedings BVIHCOM2023/0127, together with a worldwide freezing order against the company. The liquidators plead that shortly after Mittal was served with that order, he instructed Reyl, directly or through his agents, to make a further series of transfers from the account to his family members, and that between 31 July 2023 and 4 August 2023 the account paid out £10,400,000 to Sangeeta, £183,000, US$19,000,000, £20,283,378 and €1,000,000 to Vartika, £105,000 to Shristi and £91,000 to Divyesh, in cash or corporate bonds.
What The Liquidators Ask The Court To Do
The claim is brought under section 81 of the BVI Conveyancing and Law of Property Act and the Fraudulent Conveyances Act 1571, the Statute of Elizabeth, and in dishonest assistance, knowing receipt, unjust enrichment and unlawful means conspiracy. The liquidators aver that the debt transfer was entered into by Mittal in breach of the fiduciary duties he owed the company, that Direct Investments held the benefit of the debt on trust for Global Steel Holdings, and that the payments to it were the traceable proceeds of that debt. They plead that Pramod Mittal, Direct Investments, the Nigerian company, Vartika and Divyesh conspired together from on or around 12 March 2017, the date of the loan agreement between the BVI parent and the Nigerian company, to cause financial loss to Global Steel Holdings by unlawful means. They ask the court to declare the debt transfer, the loan agreement, the payments to Direct Investments and the payments to the family void and to set each of them aside, and, further or in the alternative, to order Direct Investments to pay damages, or equitable compensation for dishonest assistance, in the sum of the debt, put at at least US$103,229,104.04, together with interest and the taking of all necessary accounts and inquiries. The claim form is certified as true by James Dowers, one of the three joint liquidators, and was filed through Harney Westwood and Riegels LP of Road Town, Tortola.
Every allegation in the Tortola claim is the liquidators’ pleading, awaiting answer and proof in court, and the claim form records no judgment against Direct Investments Limited, Pramod Mittal or any member of his family. The wider wreckage around the structure is a matter of public record reported over years: the Isle of Man liquidation itself, the personal bankruptcy of Pramod Mittal in England, and the Nigerian settlement that closed the Ajaokuta dispute and sent the money through Switzerland in the first place.
