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Sanjeev Gupta’s Romanian steelworks has been hit with insolvency claims from a number of suppliers, in the latest sign of payment problems in the businessman’s industrial empire.
Liberty Galați, part of Gupta’s GFG Alliance group of companies, faces more than a dozen claims from local suppliers for unpaid invoices, according to filings at the local court of appeal reviewed by the Financial Times.
The claims add to the headwinds facing Gupta who has been battling to hold together his business since the collapse of its main lender, Greensill Capital in 2021. GFG has this year faced winding up petitions in the UK courts from creditors, including a landlord claiming one of its businesses “never paid a penny” on the lease for its corporate headquarters.
GFG is the subject of an ongoing probe by the UK’s Serious Fraud Office focusing on the financing arrangements between its businesses and Greensill. GFG has consistently denied any wrongdoing.
Adrian Popa, a manager at Uni Steel, which supplies raw materials to Liberty Galați, told the FT last week that his company had filed an insolvency claim over an alleged €1mn unpaid debt “because we didn’t see any other solution”.
“We cannot discuss with them. They refuse to pick up the phone, they refuse to reply to the mails,” he said, adding that Gupta’s Liberty Steel group recently bought the Dunaferr steel mill in Hungary while debts to suppliers have remained outstanding.
“They don’t have money to pay the suppliers, but they found money to buy another company. How is that?”
On Thursday, however, Popa said that his company had subsequently had a video call with Liberty Galați’s management to try to reach a settlement, but hadn’t reached “any final decision”.
Europan Prod, another supplier that filed an insolvency claim against Liberty Galați last month, told the FT that the debt had since been settled.
GFG said: “Many of these small claims are disputed and unjustified and are being defended. The very few that needed to be resolved are now being settled.”
“Given the number of transactions at Liberty Galați and its annual turnover of €1.5bn, these small disputes are not material issues and have no impact on Liberty Galați’s operations. The business continues to serve its key customers, pay its employees as normal and manage payments to its suppliers effectively.”
Galați and another Liberty steelworks in Ostrava in the Czech Republic are two of the main assets underpinning a more than €2bn loan from Germany’s Greensill Bank, which collapsed in March 2021 in large part due to its substantial exposure to GFG Alliance.
Operations at Gupta’s European steel business, and the wider industry, have been hit hard by the economic downturn and high energy costs in the wake of Russia’s invasion of Ukraine. Liberty has cut production and idled some of its smaller plants in the UK.
Galați has previously faced scrutiny over its sale of carbon credits. Two years ago, the plant had a carbon credit shortfall after selling allowances it had been awarded under the EU’s Emissions Trading Scheme. Ostrava eventually stepped in and sold it €40mn worth of credits, provoking an outcry from politicians and trade unions.
Gupta recently visited the UK for the first time since the SFO announced its investigation into his business in May 2021. His main base has been the United Arab Emirates since the collapse of Greensill.
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