Essar Steel Algoma Inc. sought court protection from creditors in the U.S. and Canada Monday, amid a prolonged contract fight with ore supplier Cliffs Natural Resources Inc.

Canadian steelmaker Essar has been hit with demands for damages from Cliffs due to alleged violations of a supply contract for iron ore. Essar has countersued, accusing Cliffs of violating the contract.

In a statement, Essar said it filed for protection under Canadian insolvency law to "strengthen its financial health and solidify its long-term business prospects."

Kalyan Ghosh, Essar's president and chief executive officer, said daily operations would continue unimpeded. The company has signed up $200 million in bankruptcy financing. Mr. Ghosh cited "record-low steel markets, a barrage of imports, and the untimely and wrongful termination of our long-term iron ore supply contract," as the reasons Essar sought protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice.

Essar also filed a chapter 15 bankruptcy case in the U.S., to shield its U.S. assets from creditor action while it works through its problems in Canada, the main forum for the restructuring.

Write to Peg Brickley at peg.brickley@wsj.com

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(END) Dow Jones Newswires

November 10, 2015 08:25 ET (13:25 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
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