GFG, Liberty Steel reach temporary debt agreement

The Liberty Steel subsidiary of the London-based GFG Alliance has reached what it calls “a standstill agreement” with its largest creditor, Germany-based Greensill Bank, regarding debts attached to its operations in Europe.

GFG and its metals producing subsidiaries have been struggling with cash flow and financing issues since the collapse of Greensill Capital and Greensill Bank in the first quarter of last year.

Greensill Bank worked with Liberty Steel and Liberty Commodities to use a receivables or supply chain financing technique that ultimately left the GFG Alliance exposed to creditors.

The new standstill agreement “pauses all enforcement actions until the end of October and can be extended until the end of the year,” according to Reuters. Liberty and other GFG metals production assets in several nations have been scrutinized by national governments claiming national security interests.

Reuters quotes GFG Alliance as saying, “We are working intensively towards a settlement with our major creditors in a timeframe which would obviate the need for a legal battle.”

Also on the legal front, the Serious Fraud Office in the United Kingdom announced an investigation of the GFG Alliance in May of last year.