Corporate entities now owned by the steel tycoon Sanjeev Gupta owe one of his biggest British customers nearly £14m, its administrators have claimed.
Sky News has learnt that staff at Aartee Bright Bar, which was forced into insolvency by its largest creditor last month, were briefed on Thursday that it is owed the sum by companies acquired by Mr Gupta’s GFG Alliance Group.
According to one employee with knowledge of the briefing, administrators at Alvarez & Marsal (A&M) said there was a realistic prospect that Aartee Bright Bar’s creditors would be repaid in full if the £13.7m debt is repaid.
A&M has written to the GFG-owned companies to demand repayment of the sum, the employee added.
The development is the latest in an increasingly convoluted situation unfolding at Aartee Bright Bar, which employs about 250 people in the West Midlands, Rugby, Bolton, Southampton and Newport.
Mr Gupta moved last month to gain control of Aartee Bright Bar, which buys steel bars used in sectors such as construction, by acquiring control of a Singapore-based company called Aartee Group Pte Limited.
That entity is an indirect shareholder in two UK steel companies which collapsed into insolvency last week.
GFG has filed a legal challenge to try to overturn the administration of Aartee Bright Bar Ltd and Aartee Bright Bar Property Ltd, with a court hearing due to take place in mid-March.
A&M is now running a sale process for the insolvent operations, with industry sources saying there was “strong interest” in acquiring them.
GFG, which owns Mr Gupta’s Liberty Steel empire, has provided funding to cover Aartee Bright Bar’s wages for four weeks to prevent job losses during the administration process.
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.
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In a statement issued at the time of its appointment, Michael Magnay, joint administrator at A&M, said: “Like many businesses in its sector, Aartee Bright Bar has been facing significant headwinds as a result of the challenging economic environment and fluctuating steel prices.
“Against this backdrop, administrators have been appointed and we are exploring the options available to preserve value.”
Aartee Bright Bar’s insolvency comes amid talks 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 GFG Alliance spokesperson said: “Our rescue plan for ABB is about saving a vital part of the UK steel supply chain and 250 viable steel jobs.
“The administration process is unjustified and unnecessary, and we will fight it through our application to the court to get it overturned.”
A&M has been contacted for comment.