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By Mila Besich-Lira
Sterlite Industries, a subsidiary of Vedanta Resources, the London-based FTSE 100 metal and mining group, announced in March 2008 the signing of an agreement with Asarco, for purchase of, substantially, all the operating assets of Asarco.
The then bankrupt Tucson-based Asarco agreed to sell all its copper mining assets to a subsidiary of Sterlite Industries of India.
The agreement at the time was subject to the approval of the U.S. Bankruptcy Court for the Southern District of Texas, Corpus Christi Division.
But in May of 2008, Sterlite Industries decided to back out of the purchase, claiming that it was due to the economic downturn and the declining cost of copper.
Asarco successfully sued Sterlite over the breach of the purchase agreement. Federal Judge Richard S. Schmidt found that had Sterlite not breached the purchase in 2008 the reorganization of ASARCO could have been complete by March of 2009. Because of the breach, it took until November of 2009 for the bankruptcy court to approve Asarco’s purchase by Grupo Mexico.
Judge Schmidt also found that there were no provisions in the purchase agreement to allow Sterlite to back out of the purchase due to declining global economics or copper prices. He awarded Asarco $132.8 million in damages, less a $50 million letter of credit that Asarco was authorized in 2009 to draw down.
Sterlite Industries will be heading back to court to fend off another lawsuit stemming from the breach. Upon backing out of the agreement the company did not pay their legal fees to Harkins Cunningham LLP.
On Wednesday, Jan. 23, 2013, Harkins Cunningham LLP filed a breach of contract suit against Sterlite. Harkins claims that Sterlite owes the firm $80,000 for services rendered over a 30-day period while the company was planning on acquiring ASARCO for $2.6 billion. Harkins claims that Sterlite breached their written agreement.
The law firm has attempted to collect payment from Sterlite for the services rendered for three years. They are seeking payment of legal fees, plus prejudgment interest, costs and other expenses.
Story compiled from an article posted online at Law360.com.
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