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U.S. Supreme Court sides with BP unit to curtail Superfund site cleanup lawsuits

New Delhi, April 20: The U.S. Supreme Court handed BP Plc unit Atlantic Richfield Co. a victory on Monday, making it harder for landowners in the country’s Montana state to seek a more extensive cleanup of a hazardous waste site than the federal government had ordered.

In a case involving the Environmental Protection Agency’s Superfund program responsible for cleaning up certain toxic waste sites, the justices threw out a state court decision that had allowed the claims for restoration damages by the private landowners at Atlantic Richfield’s former Anaconda copper smelter in western Montana to proceed to trial, The Reuters reported.

In the 7-2 ruling authored by conservative Chief Justice John Roberts, the court decided that under the law governing Superfund sites the property owners needed the EPA’s approval before undertaking restoration of their own contaminated land.

That system ensures the “careful development of a single EPA-led cleanup effort rather than tens of thousands of competing individual ones,” Roberts wrote.

In dissent, Justice Neil Gorsuch, joined by fellow conservative Justice Clarence Thomas, denounced the implication that property owners “cannot be trusted to clean up their lands without causing trouble.”

The case hinged on the scope of the Superfund law. The Superfund program, started in 1980, is intended to identify contaminated sites and ensure that those responsible for the pollution pay for the hazardous waste cleanup. It has been criticised over the years for slow cleanup efforts.

The decision represented a victory for companies like Atlantic Richfield and business groups that said the lower court’s decision could have led to thousands more lawsuits against companies nationwide, further complicating federally mandated improvements to contaminated land.

The Anaconda smelter operated between 1884 and 1980 near the small community of Opportunity, Montana, providing much of the world’s copper supply. The area is filled with creeks and streams that cross forests and farmland. It was designated as a Superfund site in 1983 to reduce arsenic contamination in residential yards, pastures and ground water.

The landowners sued in 2008 in state court to restore their properties to pre-smelter conditions. Atlantic Richfield said such state law claims were barred by the EPA’s actions under the Superfund law.

The Montana Supreme Court ruled against Atlantic Richfield in 2017.

US President Donald Trump’s administration and industry lobby groups backed Atlantic Richfield, which has spent $450 million on EPA-ordered soil and ground water restoration at the site.

Monday’s ruling included a sharp exchange between Roberts and Gorsuch. Roberts sought to allay landowner concerns because the law does not apply to minor actions such as planting a garden, installing a lawn sprinkler or digging a sandbox. That is fine, Gorsuch replied, “provided, of course, they don’t scoop out too much arsenic in the process.”

Gorsuch said the court should have allowed restoration efforts under state law and compared requiring EPA approval to “paternalistic central planning.” Roberts said it was instead the “spirit of cooperative federalism.”

https://www.reuters.com/article/us-usa-court-superfund/u-s-supreme-court-sides-with-bp-unit-to-curtail-superfund-site-cleanup-lawsuits-idUSKBN222207

Edelweiss moves Bombay High Court to prevent rating downgrade by ICRA

Mumbai, April 20: Edelweiss Financial Services has filed a writ petition in the Bombay High Court seeking to restrain ICRA Ltd. from downgrading its debt, according to three people in the know, Bloomberg reported.

The rating agency is looking to downgrade the financial services provider by a notch to A-plus, the people told BloombergQuint on the condition of anonymity. As of June 2019, ICRA had an AA-minus rating—high degree of safety regarding timely servicing of financial obligations and carry a very low credit risk—on Edelweiss.

To arrive at the rating, ICRA had considered the financials of the consolidated entity that includes more than 65 subsidiaries and associates. “ICRA has taken a consolidated view of the Edelweiss group, given the close linkages between the group entities, common promoters and senior management team, shared brand name, and strong financial and operational synergies,” it had said in the June 2019 note. The annual review is yet to be released and is being challenged in the court.

According to a fourth person aware of the matter, the rationale for the ratings downgrade was based on ICRA’s apprehension about the impact of Covid-19 even as the financial services firm hasn’t shared the complete information due to the lockdown. Edelweiss has sought an additional two-three weeks to furnish information, including a financial picture based on the relaxation and relief provided by the government and the market regulator, the person said on the condition of anonymity as the matter is sub-judice.

The petition comes as the Securities and Exchange Board of India in March relaxed norms to recognise defaults by the credit rating agencies after the Reserve Bank of India provided moratorium on loans. SEBI also allowed rating agencies a 30-day relaxation to put up annual and semi-annual ratings actions, given difficulties in getting information from the issuers and third parties. The credit rating agencies, however, should endeavour to finish the exercise on a best effort basis, it had said.

Edelweiss declined to comment on BloombergQuint’s queries since the matter is sub-judice, while ICRA has yet to respond.

A rating downgrade may have a significant impact at this time on access to capital for the Edelweiss group. Such a move usually leads to accelerated payments and raise the cost of borrowings from banks. That makes it difficult for the instruments of the company to participate in the targeted long-term repo operations announced by the Reserve Bank of India. Currently, banks are largely participating in AAA and AA category instruments of non-bank lenders.

Edelweiss’ total debt stood at Rs 36,848 crore as of December 2019. The capital adequacy stood at 21.4 percent and liquidity at Rs 10,300 crore. The company has 58 percent of debt in form of non-convertible debentures, 41 percent in form of bank loans and 1 percent in form of commercial papers at the end of December 2019.

Of the total debt, 43 percent is held by banks, 27 percent by retail, 10 percent by mutual fund and 20 percent by provident funds, insurance and financial institutions, according to its third-quarter investor presentation.

Read more at: https://www.bloombergquint.com/business/edelweiss-moves-bombay-high-court-to-prevent-rating-downgrade-by-icra

Coronavirus outbreak puts brakes on corporate fraud investigations

New Delhi, April 10: The coronavirus outbreak appears to have come as a blessing in disguise for those being investigated for their alleged involvement in corporate fraud cases – Rana Kapoor’s YES Bank case, Chanda Kochhar’s quid pro quo, Edelweiss-Capstone forex violation matter, Jet Airways-Goyals’ firms, Air Asia probe among others.

Sources say law enforcement agencies, including the Enforcement Directorate (ED), Central Bureau of Investigation (CBI) and Serious Fraud Investigation Office, decided to delay full-scale investigation in major matters for at least a month.

Business Standard spoke to senior officials in these agencies. According to them, summons, questioning and related action have been postponed due to the lockdown. “We have considered pleas for adjournment of summons that were being served to people in ongoing matters. In some cases, we have given fresh date, which is between April end and May first week,” said an official of a federal agency.

This may give relief to the accused and slow the investigation in crucial matters, especially cases that need immediate attention. This is because evidences might be distorted or get influenced, said an ex-official of a probe agency.

One such matter pertains to the YES Bank Director Rana Kapoor case, where the ED summoned a clutch of big borrowers, including Reliance Group Chairman Anil Ambani, Essel Group Chairman Subhash Chandra, Indiabulls Group founder Sameer Gehlaut and Jet Airways founder Naresh Goyal. 

Some of these people have already been issued fresh summons and were given a new date for personal appearance. Those who got extension from the previous date can also be given exemption, said officials in the enforcement agency. Kapoor’s bail plea, which was listed on March 26, was adjourned by the sessions court.

The Bombay High Court sought a feedback from J J Hospital to take a call on the bail plea of Kapoor. Other cases of ED which get impacted are – Chanda Kochhar’s quid pro quo, Edelweiss-Capstone forex violation matter, Jet Airways-Goyals’ shady firms, Air Asia probe where ED was to submit its report to the Delhi HC.

They also include financial fraud at Infrastructure Leasing & Financial Services (IL&FS), chargesheet in former finance minister P Chidambaram’s matter and so on.

Similarly, probes by CBI and SFIO, which are examining most of these matters from corruption and the company law violation perspective, have also been affected.

Sources said the probe agencies are planning to move an application, seeking more time with respect to the filing of chargesheet in matters.

https://www.business-standard.com/article/companies/coronavirus-outbreak-puts-brakes-on-corporate-fraud-investigations-120032900001_1.html

Bombay High Court Restrains ICICI Home Finance From Selling MEP Infra Shares

Mumbai, April 9: The Bombay High Court restrained ICICI Home Finance Ltd. from further selling shares of MEP Infrastructure Developers Ltd. offered as a collateral against a term loan by the road developer’s promoter group firm.

The relief, however, is subject to timely payments of dues by Ideal Toll and Infrastructure Pvt. Ltd. as per the timelines prescribed by the court, according to the order by Justice AK Menon, who heard the case via video-conferencing, Bloomberg reported.

While prohibiting ICICI Home Finance from declaring Ideal Toll’s account as a non-performing asset till it commits a default, the court directed the company to deposit Rs 1.71 crore in instalments and interest in a staggered manner before May 15. The court, however, allowed the lender to sell the pledged shares if toll company defaults on making repayments.

The court passed a separate order to restrain ICICI Home Finance from selling the pledged shares on a petition by a non-executive director of MEP Infra.

ICICI Home Finance had sold some of the shares pledged by Ideal Toll after the stock of MEP Infra tumbled, tracking the worst selloff in Indian equities in more than a decade due to the disruption caused by the Covid-19 outbreak. Ideal Toll moved the court to restrain mortgage lender from selling pledged shares and sought return of shares already sold.

Courts in India are granting relief to beleaguered companies hit hard by the outbreak of Covid-19 outbreak and the resultant lockdown imposed by the central government. The Delhi High Court recently restrained Yes Bank from declaring Anant Raj Ltd. as a NPA on similar grounds.

https://www.bloombergquint.com/business/bombay-high-court-restrains-icici-home-finance-from-selling-mep-infra-shares

Rajasthan High Court allows UltraTech plea

Mumbai, April 9: In a major relief for UltraTech, the Rajasthan High Court has struck down the demand raised by the Goods and Services Tax (GST) Department against the company for unpaid dues of Binani Cement. The court termed the demand illegal and arbitrary. 

Binani Cement was acquired by the Aditya Birla Group cement company through corporate insolvency resolution process (CIRP) in 2018 for ₹7,900 crore. Later, it was renamed UltraTech Nathdwara Cement. 

On Tuesday, a division bench of Rajasthan High Court comprising Justices Sandeep Mehta and Vijay Bishnoi, while allowing the plea filed by UltraTech, observed that the demand notices are ex-facie illegal, arbitrary and per se cannot be sustained since that was already accounted for at the time of the revival plan approved by the lenders, The Economic Times reported. 

https://economictimes.indiatimes.com/news/politics-and-nation/rajasthan-high-court-allows-ultratech-plea/articleshow/75053720.cms

Delhi High Court says Yes Bank can’t declare Anant Raj as NPA due to Covid-19 crisis

Mumbai, April 7: The Delhi High Court said Yes Bank Ltd. cannot classify a real estate developer’s account as non-performing asset for its failure to repay dues on account of the coronavirus outbreak.

Anant Raj Ltd. argued that it defaulted on the payments due on January 1 because of the adverse effect of the pandemic on the real estate industry, Bloomberg reported. The developer relied on the Reserve Bank of India’s regulatory policy that allowed banks and financial institutions to impose a moratorium of three months on payment of instalments against outstanding loans as on March 1.

The petitioner has already repaid dues worth around Rs 1,000 crore.

Justice Sanjeev Sachdeva, who heard the case via video conference amid a nationwide lockdown to combat spreading of the novel virus, read into the Reserve Bank of India’s measures to ease financial stress on borrowers, and restored classification of Anant Raj Ltd.’s account as it stood on March 1. The developer said it would make the payment by April 25.

Yes Bank, however, argued that according to the RBI’s norms, if an instalment becomes overdue by a period of 90 days, the account must be declared as an NPA.

https://www.bloombergquint.com/business/delhi-high-court-says-yes-bank-cant-declare-anant-raj-as-npa-due-to-covid-19-crisis

Legal Technologists Could Face ‘Summer of Contract Work’ Due to COVID-19

April 7: The gig market for legal technologists may experience a significant uptick this year as downsizing law firms look to continue leveraging their expertise. 

Despite the COVID-19-induced curveball thrown into legal market, staffers working on client matters that require specialised litigation support will keep their jobs—for now. Legal technologists who are let go can still likely will find part-time work, noted David Netzer, founder and president of US-based recruitment consultancy Legal Tech Talent Network. 

“In terms of increased hiring, I would predict there will be part-time gig type of work for people that if the economy stays like this are eventually laid off,” Netzer told law.com. “If law firms were to take on a matter that requires an expert, I think these people will be hired for contract work.”

Though COVID-19 is stoking job insecurity, Netzer noted the shift toward more legal professionals working remotely may have bolstered some law firms’ confidence in remote employees even without a pandemic. 

“With this forced shift of law firms, corporations and consulting firms having to allow their employees to work remotely, we will probably see a bit of a comfort level with these law firms to take on more gig and contract workers,” he noted. 

And such contract work be easy to come by. COVID-19 legislation, downsizing and potential litigation related to the novel virus likely means a boon for some practice groups, Netzer argued. Those practices include bankruptcy, probate, medical malpractice, employment law and bad faith lawsuits, which could lead to firms needing at least short-term support staff.

https://www.law.com/legaltechnews/2020/04/07/legal-technologists-could-face-summer-of-contract-work-due-to-covid-19/

Volkswagen suffers big setback in one of UK’s largest consumer lawsuits

London/Frankfurt, April 6: Volkswagen suffered a big setback in one of the UK’s largest consumer lawsuits on Monday after London’s High Court ruled the company fitted its cars with “defeat device” software that circumvented pollution emissions limits.

VW now faces further litigation, which will determine whether it is liable to pay damages to more than 90,000 British claimants, and how much they will receive, the Financial Times reported.

The world’s largest carmaker has paid out more than €31billion in costs related to ‘Dieselgate’, including $10billion in a settlement reached with US consumers months after the scandal broke in 2015.

In February, VW agreed a €830million settlement with more than 400,000 claimants in Germany, where it also faces many individual cases.

However, the automaker is still fighting the High Court lawsuit in the UK, where British customers claim they are due damages after they were sold cars that artificially lowered emissions of nitrogen oxide during testing.

VW said it was considering an appeal on the decisions reached on Monday, before proceeding to the main trial.

Lawyers for the carmaker argue that the vehicles in question have always been safe, roadworthy and legal to drive in the UK, and that an update rolled out in the aftermath of ‘Dieselgate’ dealt with the software issue.

On Monday, Justice Waksman ruled that VW’s vehicles were installed with a defeat device and also that as a matter of EU law, he was bound by the findings of the German Federal Motor Transport Authority (KBA) in 2015 that VW vehicles contained a prohibited workaround.

In his ruling, the judge said he was “far from alone” in reaching his conclusions, as the KBA and “numerous courts and other bodies in various jurisdictions” all agreed that the software function had been used to cheat emissions tests.

He said his conclusions did not depend on court decisions elsewhere because “the answer is so plain in any event”. He was also critical of parts of VW’s defence describing some of its arguments as “specious” and “hopeless”.

Lawyers representing the 91,000 British consumers welcomed the ruling.

Gareth Pope, lawyer at Slater and Gordon, said: “This damning judgment confirms what our clients have known for a long time, but which VW has refused to accept: namely that VW fitted defeat devices into millions of vehicles in the UK in order to cheat emissions tests.” 

Bozena Michalowska-Howells, a lawyer at Leigh Day that is representing some claimants, urged the carmaker to consider settlement negotiations “so our clients are not forced to drag VW through the courts and be faced with further years of litigation to determine their losses”.

VW said it was “disappointed”, but the ruling related to “preliminary issues” and it would continue to defend its position “robustly”. It said: “To be clear, today’s decision does not determine liability or any issues of causation or loss for any of the causes of actions claimed. These remain to be determined by the court as the case continues.”

https://www.ft.com/content/2aede590-667c-4fb9-985f-c37bba06502a

Paris-based legal tech startup raises €1million seed funding

April 6: Paris-based startup Jus Mundi, the search engine for international law and arbitration, has announced closing a €1 million seed funding round from angel investors from various countries. 

Jus Mundi was founded in late 2018 by a team of five engineers and a lawyer, Jean-Rémi de Maistre, who was representing governments in high-stake international arbitrations. Jean-Rémi realized that artificial intelligence could increase the chances of winning his client’s cases by finding key legal information in any language or by analyzing data related to the arbitrators who decide those cases.

Jus Mundi was quick to raise a highly sought-after seed round of €1 million that comes, such as the US, Germany, The Netherlands, UK, Ireland, and Australia besides France. These include several successful entrepreneurs and business angels, namely, Stefan Tietze (founder gebraucht.de), Kai Hansen (founder Lieferando), Cedric Page and Elie Rotenberg (founders Millenium.org and Webedia gaming), Olivier Njamfa (founder Eptica) and leading business angels clubs (INSEAD, Seed4Soft, and Holnest).   

The company developed its proprietary technology to collect and structure legal data such as international arbitration awards or treaties between states. The team is also using the most sophisticated machine learning algorithms to apprehend the diversity and complexity of data coming from all over the world. In less than a year, the revolutionary tool has attracted several governments and most of the world’s top law firms, including DLA Piper, Clifford Chance, Freshfields Bruckhaus Deringer, and Eversheds Sutherland. 

From NCLT to 4,800% returns: It’s a multibagger amid market mayhem

April 2: As equity investors lost about Rs 50 lakh crore wealth in the brutal selloff triggered by the Covid-19 outbreak, one stock rallied over 1,000 per cent in the last two months after emerging out of a corporate insolvency resolution process at the NCLT. 

Small cap stock Ruchi Soya industry, that was acquired by Patanjali Ayurveda in late 2019, scripted a trailblazing comeback from 52-week lows as it has since risen over 5,300 cent to hit all-time high of Rs 162 on March 30, rising from a low of Rs 3.28 hit on July 24, 2019, the Economic Times reported.

Ruchi Soya is one of the largest manufacturers of edible oils in India. It makes and sells edible oils, bakery fats and soya food primarily in India.

In December 2017, Patanjali acquired Ruchi Soya after it landed up in NCLT with a debt book exceeding Rs 12,000 crore. The ayurvedic product maker paid Rs 4,111 crore to the financial creditors.

This was the second largest insolvency case to see resolution under the Insolvency and Bankruptcy code (IBC). Prior to this, Arcelor Mittal took over Essar Steel for Rs 42,000 crore in November 2019.

The scrip is on a secular bull run and has been hitting upper circuit limits ever since January amid huge demand. It traded at Rs 17 on January 27, 2020. However, the average traded quantity on the counter in the past two weeks has been just 334. 

“After its acquisition by Patanjali, the shares were consolidated in the 100:1 ratio. Thus, there is no float available,” said Arun Mukherjee, a Kolkata-based investor and founding partner of SA Investment Advisers.

Investors fancy the stock, but there are no sellers. “It’s mainly demand-supply economics at play, leading to the rally,” Mukherjee said.

Read more at:

https://economictimes.indiatimes.com/markets/stocks/news/from-nclt-to-4800-returns-its-a-multibagger-amid-market-mayhem/articleshow/74924779.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Bombay High Court Restrains IDBI Trusteeship From Selling Future Retail’s Shares

Mumbai, April 1: The Bombay High Court has granted ad interim relief to Future Retail Ltd. by restraining IDBI Trusteeship Services Ltd. from selling the retailer’s shares that were pledged against debentures issued by a Future group entity.

This comes after the debenture trustee had issued a mandatory redemption event notice to Rural Fairprice Wholesale Ltd., the entity that issued debentures, and Future Corporate Resources Pvt. Ltd., the entity that owned shares of the retailer. 

The notice sought to sell shares for recovering dues exceeding Rs 600 crore, Bloomberg reported. 

These Future group entities moved court seeking permanent injunction against the debenture trustee.

Taking note of the present situation of the market that’s been impacted by the novel coronavirus outbreak, a single-member bench of the Bombay High Court comprising Justice KK Tated issued the order and posted the matter for further hearing until May 4.

Future Retail’s Arguments: 

Rural Fairprice Wholesale entered into a debenture trust deed in 2018 and 2019 with certain investors for raising money through debentures. Future Corporate Resources Pvt. Ltd., another future group entity pledged its 8 percent shareholding in Future Retail Ltd., against these debentures.

IDBI Trusteeship Services was appointed by the debenture holders as a Debenture Trustee for the transaction.

The prevailing market value of the equity shares at that time was Rs 350 apiece—which has slumped by two-thirds since the Covid-19 outbreak.

Senior counsels Vikram Nankani and Vineet Naik representing the Future Group entities argued that:

The market value of shares of Future Retail was as high as Rs 300 apiece during March 1—before the impact of Covid-19 on the markets.

The debenture trustees are fully secured in accordance with the debenture trust deed. The debentures trustees are, however, trying to sell the shares at prevailing prices which is less than Rs 100. A sale of shares at such prices can cause irreparable loss to the Future Group.

All stakeholders would lose if shares are sold at such low valuations.

The current situation is in light of the impact caused by the outbreak of Covid-19.

The fall in security cover for the debentures was on the back of an unprecedented collapse in the markets.

The effect of Covid-19 was even recognised by regulators like the Reserve Bank of India which granted a moratorium on loan repayments or the Insolvency Board, which increased insolvency thresholds.

There was no existing default in repayment obligations by Future Retail.

The counsel representing the debenture trustees and other defendants opposed the granting of ad interim relief on the following grounds:

The debenture trustees are to recover an amount exceeding Rs 600 crore, however the total value of Future Retail’s pledged shares had fallen to Rs 350 crore.

An ad interim relief must not be granted in light of the slump in share prices.

Counsels for Future Retail were instructed by the law firm Naik Naik and Company.

https://www.bloombergquint.com/law-and-policy/bombay-high-court-restrains-idbi-trusteeship-from-selling-future-retails-shares