Metals magnate Sanjeev Gupta has earned a three-month reprieve from legal action aimed at forcing some of its companies out of business for unpaid debts as the group’s creditors move to a more consensual approach.
Several companies in the GFG Alliance group, including Liberty Commodities and Specialty Steel UK, were due to appear in court in London next week after Citigroup filed so-called “liquidation petitions” against them, say several people familiar with it. the matter.
Hearings on the petitions, in which creditors are asking the court to close the companies so that their assets can be sold for reimbursement, have now been postponed until September, people said.
“There is a more constructive and consensual conversation going on” between Gupta’s group and its creditors, said a person familiar with the situation, although they stressed that Credit Suisse – on whose behalf Citi initially submitted petitions – I could even change my mind at any time.
The delay will give Gupta, whose industrial empire is being investigated for suspected fraud, a crucial breathing space to try to refinance its steel assets in the UK. They were on board after Greensill Capital, Gupta’s main lender, fell into a financial and political scandal in March.
Credit Suisse is suing Gupta for $ 1.2 billion due to its supply chain financial group, which has packaged debts linked to Greensill and sold them as investments to its ultra-rich customers.
The Credit Suisse team seeking reimbursement from Gupta’s companies has changed its approach in recent weeks, giving priority to negotiations over legal proceedings, according to people involved in the discussions.
The court’s delay is also linked to the recent announcement by the Insolvency Service extending a moratorium on liquidation petitions from next week to the end of September. This moratorium has been put in place to protect companies from enforcement actions by creditors if they believe their business has been damaged by the Covid-19 pandemic.
Gupta earlier this month put up for sale its specialist steelmaker Stocksbridge in Yorkshire. The industry is benefiting from a global boom in commodity prices and replacement could give it more time to make deals to reimburse financiers and perhaps avoid legal action at all.
After months of deteriorating relations between Credit Suisse and Gupta, the two sides announced a firm agreement this week on their Australian assets.
The bank has agreed not to intervene in liquidation proceedings against Australian companies in Gupta for six weeks, allowing it to finalize a refinancing agreement with US investors White Oak and Guggenheim. Australian companies account for just over $ 250 million of the $ 1.2 billion owed.
The pond does not extend to Gupta’s UK assets, which are considered to be more difficult to refinance.
Citi is the custodian of products similar to the bonds sold to Credit Suisse customers. For a liquidation petition to succeed, lenders must demonstrate that a company cannot pay what it owes.
The Swiss bank was forced to close its $ 10 billion Greensill fund in March, trapping the savings of more than 1,000 of its precious customers, and is in the process of recovering money lent to a number of companies due to of the supply chain financial group.
Separately, Gupta will face questions from lawmakers on the trade, energy and industrial strategy committee in July.
The Office of Serious Fraud investigates suspected fraud, money laundering and fraudulent trade in connection with GFG. The group denied the allegations and said it would cooperate with the SFO.
Credit Suisse repaid up to $ 4.8 billion to investors in its supply chain funds and had hoped to return $ 1 billion by mid-June, but the process was delayed by the regulator. financial institution in Luxembourg, where the funds are domiciled.
Citi, Credit Suisse and GFG all declined to comment.