Lenders to Arrium have lost a case against the collapsed steel manufacturing company’s key figures alleging misleading and deceptive conduct.
A judgment was handed down in the NSW Supreme Court on Tuesday.
The case was taken by its lenders, spearheaded by US-based Anchorage Capital and China’s Bank of Communications.
According to court documents, the banks alleged the company officers made misleading statements when signing drawdown and rollover notices.
The action was taken against Arrium’s former group treasurer Delia Sparkes, chief financial officer Robert Bakewell and three other employees who signed bank drawdown notices or rollover notices.
The court also dismissed a cross claim against Herbert Smith Freehills that it advised Arrium to draw down its remaining debt and deposit the amount drawn down with a non-lender bank in advice that was misleading and deceptive.
It comes after the listed Arrium, which owned steel manufacturing assets including the steelworks at Whyalla and mining consumables business Moly Cop, collapsed in 2016 owing about $2.6bn to its lenders.
Before its collapse in 2015, Arrium launched a process to sell its prized Moly-Cop asset through advisers UBS and Lazard with the hope of achieving a price of about $2bn – the size of the debt pile in December of that year.
However, efforts to secure a deal for that price were unsuccessful and assets were later sold off by the company when under voluntary administration.
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