Fears are mounting that Sanjeev Gupta’s steel empire is on the brink of collapse after creditors tried to shut one of his businesses.
Bankers acting for Credit Suisse filed papers in the insolvency court to wind up a trading company, Liberty Commodities, owned by Gupta’s GFG Alliance.
There are worries similar action could be taken against other companies owned by Gupta. This could include Liberty Steel, which employs 3,000 people in the UK and runs a dozen factories.
Crisis: Sanjeev Gupta, 50, who was dubbed the ‘saviour of UK steel’ after a takeover spree that started in 2013 saw him turn Liberty into the country’s third-largest steel maker
Business Secretary Kwasi Kwarteng has said the Government will do ‘everything it can’ and that ‘all options are on the table’ to save Liberty’s jobs and plants.
But ministers have ruled out giving any money to GFG because it has a complicated and opaque structure, which Kwarteng said made it difficult for the Government to guarantee that any cash it was given would be spent in the UK.
Credit Suisse is keen to recoup cash after the collapse of GFG’s major lender Greensill Capital at the start of March left it nursing billions of pounds of losses.
Greensill is in administration – but to raise money the Swiss bank has directly targeted GFG, to which it lent funds through the failed financial firm.
It is the latest blow to Gupta, 50, who was dubbed the ‘saviour of UK steel’ after a takeover spree that started in 2013 saw him turn Liberty into the country’s third-largest steel maker. He said March was the hardest month of his life.
Industry sources believe three or four companies have been targeted with court action – and that an application to wind up Liberty’s Specialty Steel division in Rotherham could be next.
This would put 2,000 jobs at risk. The Specialty Steel business makes parts for the aerospace sector, including customers such as Rolls-Royce.
Lenders such as Credit Suisse can apply to a court and ask it to close a company that owes them money. To be successful, it has to show that the company cannot pay what it owes.
If that is the case, the company’s assets can be sold to repay it.
A GFG spokesman said: ‘GFG Alliance is in constructive discussions with Grant Thornton, Greensill’s administrators, to negotiate a consensual and amicable solution on the way forward.’
Credit Suisse declined to comment.
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