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Embattled metals tycoon Sanjeev Gupta fought legal battles on two fronts on Tuesday, as he attempts to prop up his GFG Alliance group.
Making a rare public appearance, Gupta gave evidence in a court in Antwerp to try to overturn an order to put his company’s Liege operations into liquidation.
Meanwhile, in London, a separate court session behind closed doors began a preliminary hearing in relation to a creditor’s winding up petitions against three GFG companies.
The two hearings underline the scale of the challenge facing the industrialist who has been battling to refinance GFG ever since the collapse of its main lender, Greensill Capital, in March last year.
GFG is also being probed over suspected fraud and money laundering by UK and French authorities, both of which have stepped up their investigations in recent weeks.
Gupta used his appearance in Antwerp’s court of appeal to argue that his company remained “fully committed” to the Liege facility, which operates under GFG’s steel arm, Liberty Steel.
The Liege Commercial Court last month rejected restructuring plans put forward by Liberty Steel for its Belgian assets and ordered the liquidation of its Liege subsidiary. GFG acquired the two sites at Flemalle and Tilleur, which together employ a total of about 650 people near Liege, and a facility in Dudelange, Luxembourg from ArcelorMittal in 2018.
The company had “taken all the necessary steps to rectify the situation”, Gupta told Belgian media. Asked where the money had come from, he said: “Within the group, of course.”
Liberty Steel said in a statement that it had already “injected new funding” into the two Liege plants “through a series of intragroup debt-to-equity conversions and new cash equity injection”. The new funding would enable the plants to resume production immediately, the company claimed.
Meanwhile, in a separate private session at London’s Insolvency and Companies court, Judge Nicholas Briggs heard arguments over whether three GFG companies should enter wind-up proceedings.
Under temporary rules introduced during the pandemic, UK insolvency cases have a preliminary hearing to establish whether the company’s troubles were a result of the pandemic or more fundamental problems inherent within the group.
The preliminary hearing is due to conclude on Wednesday, at which point the judge will decide whether winding up petitions against certain companies should go ahead, a move that could put thousands of steel jobs at risk in politically sensitive areas of the UK.
The case was brought by US investment bank Citigroup, as trustee to Credit Suisse funds that lent more than $1.3bn to GFG via collapsed finance firm Greensill Capital.
Citi filed a flurry of applications in London’s insolvency court against some of Gupta’s commodities and industrial businesses in March 2021.
Under UK law, creditors can apply to the court to close a company that owes them money. To succeed, they must show that the company cannot pay what it owes, in which case the company’s assets can be sold to repay them.
Gupta managed to delay the hearings for more than a year after convincing Credit Suisse to push back the winding up procedure.
But according to people familiar with the matter, the Swiss bank’s negotiators have recently lost faith that they will be able to reach a settlement with Gupta after his businesses were hit by police raids in France and investigators from the UK’s Serious Fraud Office stepped up their probe of the group.
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