6 Indian banks sue GVK Coal Developers in London for $1.5 bn loan default
The banks have sued GVK Group-owned GVK Coal Developers over a dispute on a $1-billion loan and $35-million letter of credit facility and a $160-million loan
According to a story in The Times of India, six Indian banks, including Canara Bank, ICICI Bank, Bank of Baroda, Bank of India, Axis Bank, and Indian Overseas Bank, have sued Singapore's GVK Coal Developers for Rs 12,114 crore ($1.5 billion) plus interest at the London High Court.
The banks have sued GVK Coal Developers, which is owned by the GVK Group, over a dispute over a $1 billion loan and a $35 million letter of credit facility that five banks provided to the company in 2011, as well as a $160 million loan lent in 2014, according to the newspaper. All of these debts were allegedly defaulted on by GVK, according to the banks.
In the case, which is set to begin on Monday, nine additional GVK Group companies that were guarantors for the loans are also being sued. Seven of the nine companies are situated in Singapore, with the remaining two in Secunderabad, India.
The conglomerate has stated that it has not broken the agreement. It has also stated that it does not owe the $1.5 billion debt.
According to TOI, the banks claimed that GVK failed to make certain payments after failing to get a mining lease in the Alpha project in Queensland, Australia, by December 31, 2012. According to the banks, the project was a key milestone that needed to be met.
According to the banks, they wrote to GVK in November 2020, informed them that they had cancelled the deal and wanted restitution. According to the six banks, neither GVK nor any of its guarantors paid back the money owed to them.
According to TOI, GVK used the financing to fund the acquisition of the Hancock enterprises in Australia and the development of its assets, notably the Alpha project, into functioning coal mines.
"The decline in the coal market, the lack of third-party investment, and legal challenges to the mining projects in Queensland courts meant that very little progress was made to develop the mining assets," GVK said.
While GVK admitted that it was unable to obtain the lease owing to environmental challenges, it denied that it had "defaulted."
