Battle over Liberty Steel customer Aartee Bright Bar intensifies after court ruling

The fight for control of Aartee Bright Bar, involving metals tycoon Sanjeev Gupta, intensified after a judge put the holding company of Britain’s largest distributor of steel products into compulsory liquidation.

Friday’s decision could pave the way for the sale of Aartee to a third party, according to people familiar with the situation, who said a deal could be announced as early as this week.

Gupta’s Liberty Steel, however, has insisted that its rival plans for the business would secure its long-term future at a time when Britain’s steel industry is haemorrhaging jobs.

Aartee is Britain’s largest distributor of steel products and was owned by Ravi Trehan, a close associate of Gupta. It buys steel bars, mainly used in the construction industry, from Gupta’s Liberty Steel. Based in the West Midlands, the company employs 250 people.

Aartee was put into administration in February at the behest of its main creditor, FGI Worldwide, with consultancy Alvarez & Marsal appointed to handle the insolvency.

Gupta’s GFG Alliance, which includes Liberty Steel, announced later that month that it had acquired Aartee after purchasing its ultimate holding company, Singapore-based Aartee Group Pte Limited, from Trehan. Gupta was also appointed a director of Aartee’s immediate UK holding company, Aartee Steel Group, on February 16, according to filings at Companies House.

GFG said at the time that it had filed an application to challenge the administration, promising instead to integrate Aartee’s operations into its own and saving its 250 jobs in the process. GFG’s challenge was rejected by a judge earlier this month.

The administrators to Aartee, which have been running a sales process for the UK operations, subsequently filed a winding up petition against Aartee Steel Group.

Aartee Steel Group owes Aartee about £8.8mn, according to one person familiar with the situation. GFG told the Financial Times that “any ABB intercompany balances predate our very recent ownership”. 

The judge on Friday did not appoint administrators but said Aartee Steel Group would be put into compulsory liquidation. The decision paved the way for a sale to take place, said people familiar with the situation, and raised the prospect that Aartee’s creditors may be repaid.

Alvarez & Marsal declined to comment. GFG said it had the “right plan to put ABB on the path to recovery as a solvent going concern”. 

“We have already presented our plan, which is supported by a majority of ABB’s creditors, to the administrators and will present it to the independent liquidator [of Aartee Steel Group],” GFG added.

The Financial Times has previously reported that Aartee’s owner Trehan has longstanding ties with Gupta. The 64-year-old Indian businessman was previously listed as one of the four members of GFG’s “strategic board” and met Scottish government officials in this capacity. Trehan also used to own a stake in Gupta’s metals trading outfit Liberty Commodities.