LONDON – Global law firm Reed Smith has successfully represented a consortium of six Indian banks in their claim against GVK Coal Developers (Singapore) PTE Ltd (GVK) and other companies in the GVK group for unpaid loans amounting to approximately US$2.2bn. 

Related Professionals: Gautam Bhattacharyya Akshay C. Sevak

Pile of rupees

The dispute arose when GVK defaulted on its loan repayments, breaching its payment obligations to the consortium. The banks represented by Reed Smith were Bank of Baroda, Bank of India, Canara Bank, ICICI Bank, Indian Overseas Bank, and Axis Bank.

In September 2011, the consortium of banks, excluding Axis Bank, which served as the security agent, extended financial support to GVK. This assistance included a US$1 billion loan, a US$35 million letter of credit facility, and a subsequent US$250 million loan granted in March 2014. GVK drew upon the US$1 billion loan and utilised US$160 million from the 2014 loan. However, GVK later failed to meet its financial obligations, resulting in a breach of payment terms.

Following unsuccessful attempts to recover the outstanding funds, the banks instructed Reed Smith to initiate legal proceedings against GVK and various GVK group entities in the English Commercial Court in London.

The trial judge, Dame Clare Moulder, ruled in favour of the consortium of banks, granting them over US$1 billion in interest and US$1.1 billion of the principal sum.

The Reed Smith team working on this matter was led by partner Gautam Bhattacharyya and associate Akshay Sevak with valuable support from others at the firm.

Bhattacharyya commented: “The commercial consequence of this landmark victory cannot be understated. We are delighted to have delivered this important result for our clients.”

Reed Smith instructed Karishma Vora of 39 Essex Chambers to represent the banks.