Gupta gets a stay of legal action to shut down some of its businesses


Metals tycoon Sanjeev Gupta has been granted a three-month reprieve on a lawsuit aimed at forcing some of his businesses to close their doors over unpaid debts as the group’s lenders take a more consensual approach.

Several companies in Gupta’s GFG Alliance group, including Liberty Commodities and Specialty Steel UK, were due to appear in court in London next week after Citigroup filed a so-called “liquidation petition” against them, several people familiar with the folder.

Hearings on the petitions, in which creditors ask the court to shut down businesses so their assets can be sold to pay them off, have now been delayed until September, people said.

“There are more constructive and consensual conversations going on” between the Gupta group and its creditors, said a person familiar with the situation, although they pointed out that Credit Suisse – on whose behalf Citi originally filed the petitions – could still change his mind at any time. .

The delay will give Gupta, whose industrial empire is under investigation for suspected fraud, a crucial respite in an attempt to refinance its British steel assets. They are on the brink after the collapse of Greensill Capital, Gupta’s main lender, in a financial and political scandal in March.

Credit Suisse is suing Gupta for $ 1.2 billion owed to its group of supply chain finance funds, which pooled debt linked to Greensill and sold them as investments to its ultra-wealthy clients .

The Credit Suisse team demanding reimbursement from Gupta companies has changed its approach in recent weeks, favoring negotiations over legal proceedings, according to people involved in the discussions.

The court’s delay is also linked to the Insolvency Department’s recent announcement extending a moratorium on liquidation petitions from next week to the end of September. This moratorium was put in place to protect businesses from enforcement action by creditors if they believe their business has been damaged by the Covid-19 pandemic.

Earlier this month, Gupta put its Stocksbridge special steel plant in Yorkshire up for sale. The industrialist is benefiting from a global boom in commodity prices and the reprieve could give him more time to make deals to repay lenders and possibly avoid legal action altogether.

After months of deteriorating relations between Credit Suisse and Gupta, the two sides this week announced a standstill agreement on its Australian assets.

The bank agreed not to initiate liquidation proceedings against Gupta’s Australian companies for six weeks, allowing it to finalize a refinancing deal with US investors White Oak and Guggenheim. Australian companies account for just over $ 250 million of the $ 1.2 billion owed.

The status quo does not extend to Gupta’s UK assets, which are considered more difficult to refinance.

Citi is the custodian of bond products sold to Credit Suisse clients. For a liquidation petition to be successful, lenders must prove that a business cannot pay what it owes.

The Swiss bank was forced to shut down its $ 10 billion Greensill funds in March, trapping the savings of more than 1,000 of its valued customers, and is in the process of recovering money loaned to various companies through the fundraising group. of the supply chain.

In addition, Gupta is due to answer questions from members of the committee for commercial, energy and industrial strategy in July.

The Serious Fraud Office investigates suspicions of fraud, money laundering and fraudulent transactions involving GFG. The group denied any wrongdoing and said it would cooperate with the SFO.

Credit Suisse has so far returned $ 4.8 billion to investors in its supply chain funds and hoped to return up to $ 1 billion by mid-June, but the process has been delayed by the financial regulator in Luxembourg, where the funds are domiciled.

Citi, Credit Suisse and GFG all declined to comment.

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