Billionaire Sanjeev Gupta's Steel Empire In Doldrums, 3 Companies Files For Bankruptcy. Here Are Details.

It is for the first time that the three factories from the steel magnate's empire will be heading for bankruptcy protection after the collapse of British firm Greensill, a major provider of trade finance for GFG Alliance.

Metals magnate Sanjeev Gupta, who owns Alvance Aluminium, will be seeking bankruptcy protection for three French auto parts factories that are part of the steelmaking GFG on Friday.

Why the need for bankruptcy arise?

It is for the first time that the three factories from the steel magnate's empire will be heading for bankruptcy protection after the collapse of British firm Greensill, a major provider of trade finance for GFG Alliance.

READ: Citibank To Exit From Consumer Business In India, Know The Impact On Existing Customers, Employees

A report in Financial Times revealed that Sanjeev Gupta opted for restructuring of the business empire last year eyeing to take advantage of the UK taxpayer-backed loans offered through the government’s coronavirus lending scheme. The company and unions updated about the development, as per the AFP report.

Which are two foundries to be shut?

The two foundries at Poitou along with an alloy wheel factory near Chateauroux employing around 850 staff will be filing for bankruptcy. However, there will be no impact on Alvance sites in the French city of Dunkerque, Duffel in Belgium, or Lochaber in Scotland.  These sites are functioning normally and holding strong positions on the market and positive cash flow, as per the company spokesperson.

After the collapse of Greensill, there were growing concerns about the future of GFG and its Liberty Steel unit, which together employ 35,000 people worldwide.

However, the founder ruled out any bailout and factory closures in April saying the company is stable and globally profitable with $20 billion in annual revenue. On the other hand, a union representative informed bankruptcy proceedings should start by the end of the month giving time to hunt for a buyer.

The factories are offering services to French carmakers Renault and Peugeot. Their operations got impacted by the transition from diesel engines while others have been hit due to stiff foreign competition.

The company had injected over 45 million euros ($54 million) into the sites but providing further support would be difficult after the collapse of Greensill.