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London’s High Court has ruled that a company in Sanjeev Gupta’s beleaguered metals empire owes $53mn to a joint venture between ArcelorMittal and Nippon Steel.
This week’s judgment came after Gupta, who is also battling numerous legal claims from creditors and a criminal prosecution for failing to file accounts on time, told the court his company was unable to participate in a trial held last November due to an inability to continue paying legal fees.
The $53mn debt stems from a complicated financing arrangement for steel purchases struck between Gupta’s Liberty group of companies and Indian trading group Essar more than a decade ago, details of which the judge, Sean O’Sullivan KC, noted were “somewhat shadowy and mysterious” even by the claimant’s own account.
After Essar Steel collapsed into insolvency, a joint venture between ArcelorMittal and Nippon Steel acquired the Indian business in 2019, including the Essar entity that had entered into the financing arrangement with Liberty. In his ruling, O’Sullivan noted that following the insolvency “a number of documents had been lost”.
The lawsuit, which was originally filed in March 2021 shortly after Gupta’s main lender Greensill Capital collapsed, is one of several strands of litigation that ArcelorMittal is pursuing against the metals magnate’s businesses.
The case centred on $52.8mn the former Essar company had advanced to Liberty as payment for steel. ArcelorMittal and Nippon Steel claim that Essar “never actually received any steel or related products or services”.
O’Sullivan said that the defence offered by Gupta’s Singaporean company LIQS Pte Ltd seemed to be that the steel trading arrangement was a “sham”, and that the signed document “deliberately bore no relation with what had actually been agreed”.
However, he added: “A case of that kind requires cogent evidence”.
LIQS was originally represented in the case by Clyde & Co, but the London law firm stepped down as the company’s solicitors in August. Gupta then wrote a letter in October explaining that LIQS would not take part in proceedings “as it cannot afford continued appropriate legal representation”.
O’Sullivan ruled that LIQS made “a deliberate decision not to attend or be represented” in the November trial, adding that he did not accept that Gupta’s company was “unable to attend for financial reasons” in the absence of any evidence, noting that it “was able to pay a top international law firm and leading counsel to act for it” until August.
ArcelorMittal is separately pursuing litigation to try to enforce a €140mn arbitration award against companies in Gupta’s Liberty Steel group. In November, ArcelorMittal successfully filed to put one of Liberty Steel’s UK holding companies into administration in a bid to reclaim the money.
A recent report from the administrators noted that shares of a key subsidiary were transferred to another entity owned by Gupta on the same day the group entered administration, which “potentially removes the value of any investment that the company had”. The administrators added that they would “investigate the circumstance of this transaction”.
Despite his legal woes and an ongoing investigation into his family’s business from the UK’s Serious Fraud Office, Gupta last week took part in discussions at the World Economic Forum in Davos. Gupta’s GFG Alliance has previously denied wrongdoing and pledged to co-operate with the SFO investigation.
GFG Alliance declined to comment.
Additional reporting by Harry Dempsey
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