Three of the firms that make up Sanjeev Gupta’s steel empire could be plunged into administration imminently, after a court rejected GFG Alliance’s bid to have a winding up order thrown out of court.
The court ruled that the metals group’s financial difficulties were not due to Covid-19, as it rejected GFG Alliance’s claims the pandemic had had a “significant adverse financial effect” on each of the three businesses.
Gupta’s metals empire could now be wound up imminently, if GFG Alliance’s creditors support plans to shut the three businesses down, in a move that would put thousands of jobs at risk.
The court’s decision comes after talks between GFG Alliance and its main creditor, Credit Suisse, collapsed in May, after the UK’s Serious Fraud Office (SFO) seized documents from the firm and French police raided the company’s offices.
Alex Jay, a partner at London law firm Stewarts, said the “winding up petition could now progress fairly quickly,” as he suggested GFG Alliance will now face the “major challenge” of negotiating with its creditors.
If pushed forwards, the process could see three GFG Alliance owned firms – Speciality Steel, Liberty Commodities, and Liberty MDR Treasury Company – wound up, with proceeds from the selling off of the companies’ assets returned to creditors.
A GFG Alliance spokesperson noted that the court’s most recent decision does not mean the three companies will actually be wound up, as they noted that any further hearing will likely be held this autumn or winter.
The company spokesperson said GFG Alliance plans to defend its position “vigorously,” as they claimed GFG Alliance’s “core businesses” are operationally strong and remain profitable.