U.S. investment bank Citigroup has filed a series of lawsuits in London Insolvency Court against some of Gupta’s commodities and industrials companies, people familiar with the matter say.
Creditors can ask the court to shut down a business that owes them money, under UK law. To be successful, they must show that the business cannot pay what it owes, in which case the assets of the business can be sold to pay them back.
Citi is the trustee of the bond-type products sold by Greensill Capital, which collapsed this month. Greensill bundled the debts of Gupta’s businesses into the products, which were then sold to investors.
One of the major investors in these notes is Credit Suisse, the beleaguered Swiss bank that has invested $ 10 billion of its clients’ money in Greensill’s investment products, the people added.
A judge on Wednesday turned down a request by the Financial Times to confirm the existence of the cases or make details public, saying that under rules introduced last year, liquidation requests are private until they are released. been reviewed at a court hearing. This process could take several weeks.
Citigroup and Credit Suisse declined to comment.
The process was started outside of administration by Grant Thornton of Greensill Capital. Gupta tried to negotiate a debt freeze with the administrators to prevent them from calling the roughly $ 5 billion in loans he owes the company.
GFG Alliance of Gupta, a sprawling family conglomerate of struggling metal factories and smelters across the world, said it remains in “constructive talks” with Grant Thornton over the impasse.
“During this time, we will vigorously defend any legal action on the grounds that we have a three-year committed facility with Greensill,” GFG said. “This dispute will take many months to go to court and, in the meantime, we are working hard to take prudent steps to manage our cash flow and refinance our business.”
Investors in Credit Suisse’s so-called supply chain finance funds have approximately $ 1.3 billion in exposure to Gupta’s metals and commodities business, according to people familiar with the matter and documents consulted. by the Financial Times.
Bloomberg first reported that Citigroup had filed a lawsuit against Gupta’s Liberty Commodities business.