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Gupta’s Liberty Steel Buys Time to Refinance With Debt Standstill

·2 min read

(Bloomberg) -- Sanjeev Gupta’s Liberty Steel said it reached a debt standstill agreement with Greensill Bank AG, its largest creditor, giving the company much-needed breathing space as it seeks fresh financing.

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The deal on debt facilities related to its European steel operations marks progress for Gupta as he tries to restructure the debts of his sprawling metals empire. The German bank, acquired by Greensill Capital before its collapse last year, held much of the $5 billion of loans that Gupta received from the fintech firm.

“Today’s standstill agreement with Greensill Bank demonstrates we are getting close to a consensual debt restructuring that is in the best interests of all our stakeholders,” a Liberty spokesperson said in an emailed statement. “We are working intensively towards a settlement with our major creditors in a timeframe which would obviate the need for a legal battle.”

The deal with Greensill Bank is valid until Oct. 31 and could be extended until the end of 2022. Detailed due diligence and information exchange continues between the two parties, Liberty said.

Gupta is still facing an insolvency court proceedings brought by Credit Suisse Group AG, which held his debts through funds that bought notes from Greensill. Last week, a London judge said that the Swiss lender’s attempt to wind up three of Gupta’s firms can proceed, saying the companies couldn’t rely on rules designed to protect companies during the coronavirus pandemic.

Read: Credit Suisse Wins Nod to Seek Liquidation of Gupta Firms

Bremen-based Greensill Bank was shut down by regulator BaFin in March 2021 after it was unable to find evidence of the assets tied to GFG on its balance sheet. Greensill is now facing a criminal probe in Germany, while the bank itself is in administration.

Gupta has already lost several assets as creditors closed in. The collapse of his biggest financier deprived his businesses of vital working capital, forcing him to sell two steel plants in France. Private equity firm American Industrial Partners also took control of his prized aluminum smelter in Dunkirk after it defaulted on its debts.

(Updates with more details on deal.)

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