Administrators of Aartee Bright Bar are attempting to dissolve the company just weeks after its acquisition by Sanjeev Gupta’s GFG Alliance.
A dispute between the steel magnate Sanjeev Gupta and one of his largest UK customers has escalated after administrators filed a petition to liquidate a company he acquired only weeks ago.
Alvarez & Marsal (A&M) has filed a petition to wind up Aartee Group Holdings Limited and an application to appoint an administrator to Aartee Steel Group Limited.
Last month, Mr. Gupta’s GFG Alliance conglomerate, which does business in the United Kingdom under the name Liberty Steel, acquired both companies.
The two entities owned by Mr. Gupta’s group owe Aartee Bright Bar, which is currently being administered by A&M, a total of roughly £14 million.
According to one employee, the Aartee Bright Bar staff was briefed on the latest developments several days ago.
According to a source close to GFG, the intercompany balances between the Aartee group entities existed for more than a decade before GFG acquired them.
Nonetheless, A&M’s attempt to liquidate one of the companies and place the other in administration exemplifies the corporate disorder in which GFG finds itself.
Mr. Gupta’s organization supplies Aartee group companies with steel products and claims to have devised a plan to save hundreds of steel industry employees.
In a statement released last week, the chief transformation officer of GFG, Jeffrey Kabel, stated, “Our plan for ABB would immediately protect jobs and provide superior results for its creditors.”
“ABB’s administration process is unjustified, unnecessary, and opposed by the majority of its creditors and employees whose jobs are at stake.”
A&M has already informed the employees of Aartee Bright Bar that there is a real possibility that its creditors will be repaid in full if the £13.7 million debt owed by the GFG-owned companies is repaid.
About 250 individuals are employed by Aartee Bright Bar in the West Midlands, Rugby, Bolton, Southampton, and Newport.
It purchases steel rods used in industries like construction.
GFG itself attempted to overturn the administration of Aartee Bright Bar Ltd and Aartee Bright Bar Property Ltd, although it is believed that a court rejected this challenge last week.
Mr. Gupta’s company initially provided funding to cover Aartee Bright Bar’s wages to prevent layoffs during the administration process; however, employees were informed late last week that this funding would no longer be provided.
According to industry sources, A&M is conducting a sale process for insolvent enterprises, and there is “strong interest” in acquiring them.
Mr. Gupta is said to have close ties to Aartee’s founder, Ravi Trehan, and Greensill Capital, a controversial supply chain finance firm that collapsed in 2021, is said to have financed several transactions between the two.
Aartee Bright Bar’s demise coincides with ongoing discussions between the government and Liberty Steel’s two larger competitors, Tata Steel and British Steel, regarding £600 million in taxpayer financing to facilitate their transition to greener electric arc furnaces.
British Steel’s financing is in jeopardy due to its Chinese owner’s plan to eliminate 800 jobs, primarily at its Scunthorpe facility.
Mr. Gupta has also announced plans to eliminate hundreds of positions throughout his UK operations.
