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August 20, 2014
12:28 EDTSSLTASARCO obtains approval of order enjoining Sesa Sterlite
On August 7, 2014, the United States District Court for the Southern District of Texas denied the request of Indian company Sesa Sterlite for an emergency stay of a turnover order issued by the United States Bankruptcy Court for the Southern District of Texas. “We are pleased with this latest ruling,” said Jorge Lazalde, executive vice-president of ASARCO. “Sesa Sterlite has attempted for years to evade responsibility for its breach of contract, and this order will help us in our efforts to enforce the judgment we have obtained.” In 2012, a U.S. Bankruptcy Court awarded ASARCO $82.75M in damages as a result of Sesa Sterlite’s breach of a purchase agreement, but for more than two years, Sesa Sterlite has refused to pay the judgment. The company’s refusal led the bankruptcy court to issue a turnover order requiring Sesa Sterlite to turnover cash, assets and property sufficient to satisfy the judgment. The turnover order also prevents Sesa Sterlite, and all persons acting in concert with Sesa Sterlite, from transferring, concealing, or otherwise disposing of Sesa Sterlite’s property until further order of the bankruptcy court. In seeking a stay, Sesa Sterlite argued that the order unfairly restricted its continuing business operations, including prohibiting Sesa Sterlite from making dividend payments to the holders of its American Depositary Shares scheduled for payment on or before August 8. The District Court denied the stay, saying, “Sterlite agreed to be governed by United States law back in 2008 when doing so was to its advantage, and only complains now when it may be brought to answer for its 2008 breach of contract.” The turnover order also impacts Sesa Sterlite’s previously issued $500M in 4% Convertible Senior Notes in the U.S. debt market, which are scheduled to mature on October 30. If Sesa Sterlite fails to pay the judgment to ASARCO by October 30, the turnover order prohibits and enjoins Sesa Sterlite and those acting in concert with it from making or transferring principal and interest payments on the Notes.
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