ArcelorMittal wins legal round in GFG dispute

A London Insolvencies and Companies Court (ICC) reportedly has ruled in favor of ArcelorMittal in a more than yearlong dispute involving funds ArcelorMittal says it is owed by the Liberty Steel business unit of the GFG Alliance.

ICC Judge Mark Mullen ruled this week that Liberty Steel is unlikely to be in position in the near future to pay more than $145 million ArcelorMittal says Liberty owes it as part of the 2019 sale of steel mills from Liberty to Luxembourg-based ArcelorMittal.

That transaction involved the sale of blast furnace/basic oxygen furnace steel mills in the Czech Republic, Italy, Macedonia and Romania from ArcelorMittal to Liberty Steel.

The ruling by Mullens could require the United Kingdom-based GFG Alliance to place its Liberty Steel subsidiary into bankruptcy administration, according to reports from Reuters and London-based Finimize Ltd.

GFG and Liberty have struggled financially on several fronts since March 2021, when European financial firm Greensill Capital collapsed. GFG conducted considerable amounts of business with Greensill, including using its supply chain invoice pre-sale financing services.

If this late November ruling results in GFG essentially being forced to put Liberty Steel into administration, it could result in several steel mills being put up for sale while Europe’s steel sector struggles to operate profitably.

“While GFG is contesting the ruling, saying it won’t impact operations or production, the administration could lead to creditor protections or a sale of Liberty Steel East Europe,” writes Finimize.

According to Reuters, in the ICC venue, “Liberty Steel East Europe argued it was unnecessary to place the company into administration, a form of creditor protection which can lead to a sale of the business, as it was planning to restructure the business.”

However, the report says ICC judge Mullen deemed Liberty Steel East Europe was unable to pay its debts or be likely to become so, ruling that a "very substantial" debt in excess of 140 million euros has been outstanding since February 2023, citing that as evidence of cash flow insolvency.