Tata puts legal case against Gupta’s Liberty Steel on hold
EMBATTLED steel entrepreneur Sanjeev Gupta has been given breathing space by Tata in a legal battle over the tycoon’s takeover of his rival’s plants.
In April, Tata filed a claim against companies in Mr Gupta’s GFG empire, understood to be related to missed payments from his £100m acquisition of the speciality steel business four years ago. Tata said yesterday it has put the claim on hold.
Mr Gupta was hailed as a saviour of
steelworkers when the deal was struck, safeguarding about 1,000 jobs.
Terms of the deal are understood to have included deferred payments, preference shares and also took into account stock held by the business.
These reduced the cash price GFG paid for the business by about a quarter.
Tata filed the legal claim against GFG alleging it was owed payments and interest totalling £7.8m. The case piled pressure on Mr Gupta, who is scrambling to refinance his empire following the collapse of its main lender Greensill Capital, with the threat of legal action compounding his problems.
However, Tata has now struck a deal pausing legal proceedings, taking the pressure off Mr Gupta’s struggling empire. A Tata spokesman said: “We can confirm an agreement has been reached to stay proceedings, but the terms of this are confidential.”
GFG declined to comment.
Mr Gupta has said he will sell half a dozen of his plants in the UK, which have more than 1,500 staff between them. The largest of them is the aerospace and special alloys business at Stocksbridge, near Sheffield, where demand has plunged because of the collapse in air travel.
Earlier this week, Kwasi Kwarteng, the Business Secretary, told MPS that he refused a request for a £170m bailout from Mr Gupta because of a lack of clarity about his company’s finances.
He said: “We could not guarantee the money would stay in the UK. We did not know what the liabilities were.” Mr Kwarteng said he was “taking Mr Gupta at his word” after being told he would refinance GFG privately. The Business Secretary added: “I had my doubts about the capacity to do that [refinance], but let’s give him the chance.”