Minerals magnate Sanjeev Gupta won a three-month waiver from legal action aimed at forcing some of his companies out of business over unpaid debts as the group’s lenders switch to a more consensual approach.
Several people familiar with the matter said several companies in Gupta’s GFG Alliance, including Liberty Commodities and Specialty Steel UK, were due to appear in court in London next week after Citigroup filed so-called “liquidation petitions” against them. .
The people said hearings on the petitions, in which creditors are asking the court to shut down businesses so that their assets can be sold to pay them, have been postponed until September.
“There are more constructive and consensual talks going on” between the Gupta group and its creditors, said one person familiar with the situation, though they stressed that Credit Suisse — on whose behalf Citi has filed the petitions — can still change its mind at any time.
The delay will give Gupta, whose industrial empire is under investigation on suspicion of fraud, important breathing space to try to refinance UK steel assets. They were teetering on the edge after Greensell Capital, Gupta’s main lender, collapsed in a financial and political scandal in March.
Credit Suisse is seeking Gupta for $1.2 billion owed to his pool of supply chain funds, which have raised debt linked to Grensel and sold them as investments to their ultra-rich clients.
The Credit Suisse team seeking repayment from Gupta’s business has changed its approach in recent weeks, prioritizing negotiations over legal action, according to people involved in the discussions.
The court adjournment is also linked to the recent announcement by the insolvency circuit to extend the moratorium on liquidation petitions from next week to the end of September. This moratorium was put in place to protect businesses from creditors’ enforcement action if they believe their business has been damaged by the Covid-19 pandemic.
Earlier this month Gupta put his specialist steel mill in Stocksbridge in Yorkshire for sale. The industrialist is taking advantage of the global boom in commodity prices, and a delay in implementation could give him more time to strike deals to repay lenders and possibly avoid court action altogether.
After months of deteriorating relations between Credit Suisse and Gupta, the two sides announced a freezing agreement this week over his Australian assets.
The bank agreed not to take action in liquidating proceedings against Gupta’s Australian business for six weeks, allowing it to finalize a refinancing deal with US investors White Oak and Guggenheim. Australian companies are worth just over $250 million of the $1.2 billion owed.
The deadlock does not extend to Gupta’s UK assets, which are seen as more difficult to refinance.
Citi is the custodian of bond-like products sold to Credit Suisse customers. For the liquidation petition to be successful, the lenders must prove that the company cannot pay what it owes.
The Swiss bank was forced to shut down its $10 billion in Greensl in March, trapping the savings of more than 1,000 of its high-profile clients, and is in the process of recovering funds loaned to a group of companies via its supply chain finance group.
Separately, Gupta is set to face questions from members of parliament on the Business, Energy and Industrial Strategy Committee in July.
The Serious Fraud Office is investigating suspected fraud, money laundering and fraudulent trading in connection with GFG. The group denied any wrongdoing and said it would cooperate with the Counter-Terrorism Office.
Credit Suisse has so far returned $4.8 billion to investors in its supply chain funds and was hoping to have up to $1 billion back by mid-June, but the process has been delayed by the financial regulator in Luxembourg, where the funds are located.
Citi, Credit Suisse and GFG declined to comment.