Sanjeev Gupta Pic: BBC
The possible decline and fall of Sanjeev Gupta’s steel empire was described last year by ICSM’s Ian Carrotte as a ‘slow motion car crash.’ You can see it happening and there’s nothing you can do to stop it.
Winding up orders have been filed against four interconnected firms in the labyrinth of companies controlled by Gupta who was once seen as ‘the saviour of the steel industry.’ And it would seem it’s not just suppliers who have run out of patience with yhe embattled group as the taxman is owed in the region £26.3million.
The firms affected are Speciality Steel UK Limited, a division of Liberty Steel, along with Liberty Pipes, Liberty Performance Steels and Liberty Merchant Bar. Speciality Steel UK Limited has 2,000 workers in plants at Rotherham and Stocksbridge, whose jobs are now threatened if it goes bust. The main trade union has blamed the situation on GFG Group who own the company. GFG is controlled by Gupta and last year demanded the Government step in to save the steel making company from liquidation with a £170m grant. That was last spring – but finally it seems creditors have caught up with the business.
GFG was hit by the collapse of the disgraced Australian businessman’s and friend of David Cameron Lex Greensill whose company Greensill Capital was essentially factoring Liberty Steel’s invoices – except many of those invoices were found later to be fictional. Afterwards Gupta asked for a Government cash injection but this was refused as the accepted wisdom is the Government didn’t want to bail out a company that will eventually fail. Instead, many think they will wait for Liberty to enter receivership and only then step in to save jobs and seek a buyer or for a short time effectively nationalise the outfit.
“Once Greensill went down it was only a matter of time this would happen,” said ICSM’s Ian Carrotte, “as the company lost most of its cash flow. My concerns are for the suppliers to the four firms. Anyone from the cleaners to the haulage contractors could end up not getting paid. Anyone considering trading with the four companies need to think long and hard about credit. Once those winding up orders take effect banks will usually freeze accounts and they won’t even be able to pay themselves let alone outsiders.”
About ICSM Credit
ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel – while at the moment there’s a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach – ask for details from Paul.
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For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk