The Economic Times reported Wednesday that lenders, lead by ICICI Bank of India, filed the suit in the New York state court system seeking $560 million in damages, claiming Essar Group allowed massive cost overruns in the Nashwauk project and failed to make scheduled loan interest payments starting in October, 2015.

The lenders invoked corporate guarantees by Essar's offshore holding company. Essar Global Fund Ltd, a Cayman Islands-based operation owned by the Ruia family, which owns and operates Essar Group and its subsidiaries, the Economic Times reported.

It's not clear how the New York lawsuit against Essar Group might impact any bankruptcy court settlement in the Essar Steel Minnesota case being handled in federal court in Delaware. But if the Indian banks are successful in winning money out of the Essar parent company, that could reduce the amount of money involved in the bankruptcy case for the Minnesota project.

A new investor, SPL Advisors, is attempting to broker a debt settlement satisfactory to the lenders and contractors, acquire the Nashwauk property and restart construction, hoping to have the project finished within two years, employing some 350 people and producing 7 million tons of taconite iron ore pellets annually.

SPL has until early February to develop a deal satisfactory to the bankruptcy judge, lenders and contractors.

The Nashwauk mine and processing plant project, now estimated at more than $2.4 billion to complete, has sat shuttered and half-built for a full year, with Essar out of cash unable to pay vendors or creditors. Essar Steel Minnesota filed for bankruptcy protection in July.

https://www.steelmarketupdate.com/news-mobile/10406-essar-steel-minnesota-suing-essar-global

Essar Steel Minnesota Suing Essar Global

Essar Steel Minnesota is suing Essar Global Group for $1 billion in damages for financial misconduct related to its uncompleted iron ore-facility.

Essar Minnesota alleges that parent company Essar Global Fund failed to provide necessary operating funds and make investments needed to complete the iron ore pellet plant under construction at ESML. The motion also accuses Essar Global of overcharging its subsidiary for materials needed for construction of the plant.

 

Essar Steel sues parent company Essar Global

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By Jennifer Austin

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jaustin@kbjr.com

Posted: Jan 12, 2017 5:56 PM EST

<em class="wnDate">Thursday, January 12, 2017 5:56 PM EST</em>Updated: Jan 26, 2017 5:56 PM EST <em class="wnDate">Thursday, January 26, 2017 5:56 PM EST</em>

 

 http://www.wbng.com/story/34249490/essar-steel-sues-parent-company-essar-global

 

 

DELAWARE -

The company formerly known as Essar Steel Minnesota is suing its former parent company Essar Global. 

The company now known as Mesabi Metallics is seeking more than $1 billion in damages, claiming parent company Essar Global misused funds causing the Nashwauk project not to be completed. 

The bankruptcy filing claims that Essar Minnesota paid more than one billion dollars to its parent company which was used to benefit the global enterprise without regard for the project in Minnesota. 

Essar Steel Minnesota filed for bankruptcy this summer. 

"Essar Global Fund Limited (“EGFL”) is aware of the complaint filed by Essar Steel Minnesota LLC (“ESML”) in the Delaware court as part of the Chapter 11 proceedings. EGFL denies all of the allegations set out in the Complaint, which it will vigorously contest. EGFL regrets that these allegations have been publicly disclosed through the Complaint being filed, prior to EGFL having the opportunity to correct and rebut these unfounded allegations," a statement from Essar read.