A row involving the steel tycoon Sanjeev Gupta and one of his biggest UK customers has deepened after administrators launched a bid to wind up a company he bought just weeks ago.
Sky News has learnt that insolvency practitioners at Alvarez & Marsal (A&M) have filed a winding-up petition against Aartee Group Holdings Limited and an application to be appointed as administrator to Aartee Steel Group Limited.
Both companies were acquired last month by Mr Gupta’s GFG Alliance conglomerate, which trades under names including Liberty Steel in the UK.
The two entities owned by Mr Gupta’s group owe Aartee Bright Bar – which itself is in an administration process being run by A&M – a total of nearly £14m, Sky News reported recently.
Staff at Aartee Bright Bar were briefed on the latest developments several days ago, according to one employee.
A person close to GFG said the intercompany balances between the Aartee group companies pre-dated its ownership of them by over a decade.
Nevertheless, the attempt by A&M to wind up one of the companies and have the other placed into administration reflects the corporate chaos in which GFG finds itself embroiled.
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Mr Gupta’s group supplies steel products to Aartee group companies, and claims to have formulated a rescue plan that would preserve hundreds of steel industry jobs.
In a statement last week, GFG chief transformation officer Jeffrey Kabel said: “Our plan for ABB would see jobs protected and provide superior outcomes for its creditors immediately.
“The administration process at ABB is unjustified, unnecessary and unsupported by a majority of its creditors and employees whose jobs are on the line.”
A&M has already told Aartee Bright Bar employees that there was a realistic prospect that its creditors would be repaid in full if the £13.7m debt owed by the GFG-owned companies is repaid.
Aartee Bright Bar employs about 250 people in the West Midlands, Rugby, Bolton, Southampton and Newport.
It buys steel bars used in sectors such as construction.
GFG itself tried to overturn the administration of Aartee Bright Bar Ltd and Aartee Bright Bar Property Ltd, although this challenge is understood to have been rejected by a court last week.
Mr Gupta’s company initially provided funding to cover Aartee Bright Bar’s wages to prevent job losses during the administration process, but staff were told late last week that this funding would not continue.
A&M is running a sale process for the insolvent operations, with industry sources saying there was “strong interest” in acquiring them.
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Mr Gupta is reported to have close ties to Ravi Trehan, Aartee’s founder, while Greensill Capital, the controversial supply chain finance group which itself collapsed in 2021, is said to have financed a number of trades between the two.
Aartee Bright Bar’s insolvency comes as talks continue between the government and Liberty Steel’s two larger competitors – Tata Steel and British Steel – about £600m of taxpayer funding to aid their transition to greener electric arc furnaces.
The funding for British Steel has been thrown into doubt by its Chinese owner’s plan to axe about 800 jobs, mainly at its Scunthorpe plant.
Mr Gupta has also announced proposals to cut hundreds of jobs across his UK operations.
A&M has been contacted for comment.
