Liberty Steel lost control over assets in Eastern Europe due to ArcelorMittal debt

ArcelorMittal, one of the world’s largest steel producers, has been granted the right to impose administration for Liberty Steel’s Eastern European division. The decision by a London court on November 26, 2024, was due to non-payment of a €140 million ($147.4 million) debt related to Liberty’s acquisition of ArcelorMittal’s Eastern European assets in 2019, Reuters reported.

The arbitration tribunal had previously recognized the debt to ArcelorMittal, and Judge Mark Mullen confirmed during the hearing that Liberty Steel East Europe was insolvent. He noted that the debt has remained unpaid since February 2023, which is proof of the company’s financial insolvency.

Liberty Steel, a member of GFG Alliance, has been facing financial difficulties since the collapse of its main lender, Greensill, in 2021. Since then, GFG Alliance has been trying to restructure its assets, particularly in the face of increasing pressure from creditors.

Representatives of GFG Alliance said that the court’s decision would not affect the operations or production of other group companies. According to them, the conflict arose from a “long-running commercial dispute” over the terms of the asset purchase agreement, which is still being considered in confidential arbitration.

ArcelorMittal refrained from commenting on the decision. Liberty Steel East Europe tried to avoid administration by pointing to its restructuring plans, but the court found them insufficient to resolve the problem.

The administration procedure is a mechanism to protect the interests of creditors, which often leads to the sale of assets. This could pose a serious challenge for Liberty Steel, which is already under pressure to restructure its debt.

The legal and commercial implications of this decision could have a significant impact on GFG Alliance’s further attempts to maintain business stability. The company is expected to continue to appeal the court decision to minimize the impact on its operations.

Liberty Steel recently announced a plan to restructure its Specialty Steel UK business. The proposed plan is designed to reduce the company’s debt and increase its ability to meet future demand.