_{Pic: BBC}

Liberty Steel: ICSM ‘there are consequences when you default on an £18m bank loan’

“Liberty Steel will go bust,” said Ian Carrotte of ICSM, “The whole set up is built on sand and now Metro Bank have called in an £18m loan the business empire of Sanjeev Gupta is set to collapse. Thousands of jobs are at stake and businesses and suppliers could be left high and dry. There are consequences when you default on a bank loan.”

Credit Suisse 

Already Credit Suisse have begun legal proceedings to wind up parts of Liberty Steel’s parent company GFG which employs 35,000 people around the world. GFG is also owed money by Liberty Steel along with Tata who are also believed to be owed considerable amounts of money and are in the process of legal action to recover the debt. With the sharks beginning to circle Gupta has put the Stocksbridge steel plant up for sale in order to pay off the growing list of creditors.

Liberty Steel were already in trouble before Greensill (the firm championed and lobbied for by former PM David Cameron) collapsed owing millions to creditors. Greensill were effectively factoring for Liberty Steel so as soon as they stopped trading so did the cash flow to Liberty. Sanjeev Gupta then asked the government for a £170m bailout but was turned down.

Serious Fraud Office

Ian Carrotte said the received wisdom is the government don’t trust Gupta due to the ‘opaque’ business dealings and the inter connections within his empire. One example is the Serious Fraud Office are investigating GFG over alleged money laundering and fraudulent trading.

The BBC reported: “However, problems had arisen with a loan secured on the Newport steelworks as early as 2018, an analysis of Land Registry documents and filings for companies linked to GFG has shown. Valued at £21m, the steelworks is owned by a UK company, Liberty Steel Property Newport Ltd (LSPN), controlled by Sanjeev Gupta.”

ICSM believes the group will inevitably collapse but the UK Government will only step in to save the plants in England and Wales once the group enters administration. Then the mess can be sorted out under a period of nationalisation before an attempt is made to secure a more reliable buyer.

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.

For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.

To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com

For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk