ArcelorMittal, Europe’s largest steelmaker, has filed a lawsuit against Liberty Steel East Europe in the English High Court, petitioning for administration due to Liberty’s non-payment of €140 million in deferred compensation related to a 2019 asset acquisition.
According to reports ArcelorMittal sold several assets to Liberty in 2019 including the Ostrava plant in the Czech Republic, Galati in Romania, Skopje in Macedonia, Piombino in Italy and Dudelange-Liege in Luxembourg and Belgium, to ensure it got merger control approval for the lease of Italian steelmaker Ilva. Liberty had agreed to pay €140 million in deferred compensation and provide consolidated financial statements, showing its assets amounted to at least €150mn until its obligations were satisfied.
On October 7, ArcelorMittal decided to apply for the administration of Liberty Steel East Europe (Holdco), represented by the law firm King & Spalding International. According to reports the company has refrained from commenting on the matter.
“This is a long-running commercial dispute relating to contested deferred consideration from 2019 which GFG is challenging through legal means. The dispute refers to claims arising from a sales and purchase agreement which is itself being litigated in confidential arbitration”, a Liberty spokesperson said.
The legal battle comes amidst a challenging period for Liberty Steel, grappling with a downturn in the steel market. Several of its acquired assets are either non-operational or functioning at a reduced capacity.
Its UK operations, with facilities like its plate mills in Scotland and the merchant bar business in Scunthorpe has also been mothballed for several years.
The legal dispute underscores the financial strain facing Liberty Steel as it navigates a challenging market environment, with repercussions potentially affecting its European operations, according to the reports.