Credit Suisse in court with Gupta as debt talks stall

AT STAKE IS A LARGE SWATHE OF THE TYCOON’S METALS EMPIRE, WHICH IS HEAVILY INDEBTED TO CREDIT SUISSE

LONDON: The Credit Suisse Group AG is battling it out in court with Sanjeev Gupta’s GFG Alliance after talks over more than a billion dollars in debts to the bank stalled.

At stake during the court hearing in London between the steel magnate and the Swiss bank is a large swathe of the tycoon’s metals empire, which is heavily indebted to Credit Suisse and could be wound up.

Negotiations between Credit Suisse and GFG for a broader restructuring of its UK and US debts have broken down, according to a person familiar with the matter.

The London hearing, which started on Tuesday, is set to last two days.

The lender became a major creditor to Gupta’s businesses through its supply chain finance funds, which bought loans Greensill Capital made to GFG.

They funds were eventually frozen, with Credit Suisse citing concerns about their valuation, while Greensill slid promptly into administration.

Since then the bank has been attempting to recover what it can for its clients.

It filed several winding up petitions against GFG’s companies last year, but hearings for them have been repeatedly delayed, giving Gupta more time to find new financing.

The status of the talks were first reported by the Financial Times. Credit Suisse declined to comment.

Gupta has had some success, but more than a year later most of the task has not been completed, undermined by concerns about GFG’s historical financing practices.

Those only grew more acute following Greensill’s collapse, when it became apparent much of the firm’s invoice-based loans to Gupta were based on predicted future sales rather than concluded ones.

“Our core international businesses continue to generate strong returns and achieve record production levels,” a GFG spokesperson said.

“We remain committed to repaying all creditors and continue to make positive progress toward a consensual debt restructuring that’s in the best interest of all stakeholders,” said the GFG spokesperson about the repayment of the debts.

Other revelations include the lack of equity used to secure his biggest ever acquisition from ArcelorMittal SA.

Four banks stopped working with Gupta’s commodity trading business, starting in 2016, after they became concerned about what they perceived to be problems with paperwork used to secure financing.

Meanwhile, Gupta has already lost major assets as other creditors closed in.

The collapse of Greensill has deprived Gupta’s businesses of vital working capital, forcing him to sell two steel plants in France.