Greensill Creditors Encircling GFG Alliance Assets
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Greensill Creditors Encircling GFG Alliance Assets

BBC reported that the time is fast approaching when the government's resolve to save the UK's third largest steel maker will be tested as victims of the

BBC reported that the time is fast approaching when the government's resolve to save the UK's third largest steel maker will be tested as victims of the Greensill collapse prepare their claims to liquidate some of the assets Mr Sanjeev Gupta pledged to Greensill to keep the cash flowing. As per BBC report, applications to compel the liquidation, winding up orders, of three Liberty Steel group companies have been filed and were originally due to be heard by a judge next week. The date for the hearing of these applications was originally scheduled for early May but the BBC understands that timeframe is expected to slip due to new COVID-related rules designed to prevent the hasty liquidation of firms damaged by the pandemic.

Insolvency experts say winding up orders are the nuclear options for creditors trying to get their money back and their very existence will severely hamper Mr Gupta's own attempts to save the business. Stewarts Law’s Mr Alex Jay told BBC "Winding up petitions is one of the most aggressive steps in a creditors' armoury they can lead to the end of a company's life and carry other very draconian legal consequences. The fact that petitions are being pursued against the Liberty businesses means that creditors plainly think they need to move quickly and urgently to protect their position. The winding up petitions add significant pressure and urgency to any rescue measures that are being considered. Any external financers will also be looking very closely at the winding up proceedings; in particular, what is being alleged, and what is owed, and this may be an obstacle to securing new finance."

However, people familiar with the matter say the creditors' real concern is not falling aerospace orders but that no-one seems to be able to locate £3bn of finance that creditors allege Greensill advanced to Gupta and remains unpaid and unaccounted for. Mr Gupta denies any wrongdoing and maintains his business dealings have been transparent throughout.

If the court applications are granted, the government's hand may be forced. A winding up order would see the appointment of an official receiver tasked with liquidating the company, which employs 5,000 people. At that point, the government would have to decide whether it would instruct the receiver to keep the company going at tax payer expense.

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