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The British government is ready to step in and to supervise an imminent insolvency of a crucial part of Sanjeev Gupta’s Liberty Steel company If necessary, the Supreme Court of London has heard.
A group of Gupta’s creditors, led by his now deeply most important lender Greensill Capital, insisted on placing Specialty Steel UK (SSUK), who employs nearly 1500 people on Wednesday at five locations in the north of England, in compulsory liquidation during the hearing on Wednesday.
The court also heard that the official recipient, a member of the Insolvency Service who supervises insolventions on behalf of the government, had submitted a draft application to appoint a “special manager” if the company goes into liquidation.
However, the government is “not in negotiations” to take steps to possess SSUK “or otherwise offer” financial help “to the company, according to a letter from the Department for Business and Trade earlier this month, to which reference was referred to during the hearing.
The official recipient can choose to appoint these external managers, who operate independently of the government, in the case of complex and large -scale insolventions.
Gupta’s GFG Alliance, the conglomerate in which Liberty Steel is located, has been affected by legal claims and criminal probes since the collapse of Greensill. GFG denies some misconduct.
The fate of the Steel Activities established in Yorkshire has been uncertain, since an earlier attempt to restructure her debt in court in May fell apart in the midst of the opposition of creditors, some of which have submitted complicated petitions to close the company.
The letter from the business department stated that “the official recipient has been prepared, if SSUK is entered into a compulsory liquidation to take over the control over SSUK’s affairs”.
The Department added in the letter that in the event that an official recipient was appointed, the government could “facilitate” a “sales process” for the group.
‘[His Majesty’s Government] was approached by independent third parties who have shown interest in giving back a few or all locations to making steel, “the letter said.
Gupta is against the plans to terminate the company and is looking for more time to appoint his own managers who can also supervise a sale of the company.
A lawyer who represents Greensill Capital said that the plan would be under this scenario to sell the company to a special vehicle “connected to the current shareholder, Mr. Gupta”, however.
Judge Sally Barber, noted that she had not seen the draft assignment from the official recipient and did not want to rule on a “blind base”, has postponed the winding petition to “the first available date after today”. This means that a further hearing can take place as soon as Thursday.
A spokesperson for Liberty Steel said after Wednesday’s hearing: “We continue to believe that our commercial solution is supported by large private capital, offers the best results for the company, his employees and all interested parties involved without costs for British taxpayers or unnecessary uncertainty.”
The largest creditor who insisting on SSUK is Citigroup, who acts in an administrative capacity that supervises bond -like investment products that Greensill Capital sold to other investors.
These investors, including UBS, claim that they owe more than £ 233 million plus further interest and costs. The Swiss bank inherited the exposure when it took over the failing local rival credit Suisse, who had deposited billions of dollars from his customers in investments related to Greensill.
The lawyer of SSUK said the court that under Gupta’s proposal Liberty Capital UK, which was described as “another entity within the GFG alliance”, the wages of the steel company and “continuous obligations” would finance until a pre-packaged insolvency was launched.
Gupta has drawn up BlackRock financing for this plan to maintain control of the company, the Financial Times reported earlier this week. Greensill’s lawyer noted that although Gupta had referred to a “term” of “well -known” investors who include BlackRock, creditors had not actually seen a copy of the document “.
The size of the general debts of SSUK is unclear because the company has not submitted any checked accounts for more than five years. Gupta is prosecuted in the UK for not submitting accounts for scores from his companies, including SSUK. The metal magnate defends himself against these charges.