Sanjeev Gupta’s GFG Alliance is threatened with bankruptcy after its main creditor, Credit Suisse, broke off negotiations with the steel industry over the repayment of its debts.
GFG Alliance is set to face an insolvency hearing next week after Credit Suisse pulled out of settlement talks, the Financial Times first reported.
Under UK law, creditors can ask the courts to shut down businesses that owe them money, if they can prove that those businesses cannot pay.
The hearing comes after Credit Suisse, which owes more than $1 billion to GFG, pulled out of negotiations with the embattled steel empire of Gupata, after the UK’s Serious Fraud Office (SFO) ruled. served the company with a notice under Section 2 and that the company’s offices were searched. by the French police.
Tuesday’s preliminary hearing will seek to determine whether the issues with GFG Alliance are Covid-related, or instead the result of deeper issues with the company.
The hearing comes after Credit Suisse invested $10bn (£8bn) of its clients’ money in investment products from collapsed financier Greensill Capital.
Credit Suisse has already granted extensions to GFG Alliance on several occasions. The Swiss bank, however, became frustrated with Gupta’s company’s lack of progress, sources told the Financial Times.
Although GFG has paid Credit Suisse $274m from its Australian operations, much of the remaining £1bn is owed by GFG’s struggling UK operations, which Credit Suisse has deemed almost worthless. .
A GFG Alliance spokesperson told City AM: “Our core international businesses continue to generate strong returns and reach record production levels.
“We remain committed to repaying all creditors and continue to make positive progress towards a consensual debt restructuring that is in the best interests of all stakeholders”