Sanjeev Gupta’s metals group has been hit with winding-up orders from investors, legal action that threatens to bring down the empire of the “saviour of steel”.
US investment bank Citigroup has filed a flurry of applications in London’s insolvency court against some of Gupta’s commodities and industrial businesses, according to people familiar with the matter.
Creditors can apply to the court to close a company that owes them money, under UK law. 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.
Citi is the trustee of bond-like products sold by Greensill Capital, which collapsed this month. Greensill packaged up debts from Gupta’s businesses into the products, which were then sold to investors.
Credit Suisse, the beleaguered Swiss bank that put $10bn of its clients’ money into Greensill’s investment products, is one of the main investors in these notes, the people added. London courts have not yet made these insolvency applications public.
Citigroup and Credit Suisse declined to comment.
The process has been triggered outside of Grant Thornton’s administration of Greensill Capital. Gupta has been trying to negotiate a debt standstill with the administrators to prevent them from calling in about $5bn of loans he owes to the company.
Gupta’s GFG Alliance, a sprawling family-owned conglomerate stitching together struggling metals mills and smelters around the world, said that it remained in “constructive discussions” with Grant Thornton over this standstill.
“While this takes place we will vigorously defend any legal action on the grounds that we have a three-year committed facility with Greensill,” GFG said. “This dispute will take many months to play out in the courts, and in the meantime we are working hard on taking prudent steps to manage our cash and refinance our business.”
Investors in Credit Suisse’s so-called supply-chain finance funds have about $1.3bn of exposure to Gupta’s metals and commodities businesses, according to people familiar with the matter and documents seen by the Financial Times.
Bloomberg first reported that Citigroup had filed against Gupta’s Liberty Commodities business.