In a significant legal move, ArcelorMittal, the largest steel producer in Europe, has filed a claim in the High Court of England against Liberty Steel East Europe. The lawsuit revolves around an outstanding debt of €140 million that Liberty Steel allegedly owes for assets acquired from ArcelorMittal in 2019. The case illustrates not only the complexities of the steel market but also Liberty Steel's ongoing financial troubles.
The assets in question include several steel plants located across Europe, specifically in Ostrava (Czech Republic), Galati (Romania), Skopje (Macedonia), Piombino (Italy), and Dudelange-Liege (Luxembourg and Belgium). This transaction was crucial for ArcelorMittal as it allowed the company to secure regulatory approval for its acquisition of the Ilva steel plant in Italy. However, Liberty Steel’s failure to pay the agreed-upon deferred compensation has led to escalating tensions between the two companies.
Liberty Steel had committed to paying the €140 million in deferred compensation and had also pledged to provide consolidated financial statements verifying that it possessed assets valued at a minimum of €150 million. However, ArcelorMittal claims that these payments have not been received. This situation has forced a court in Singapore to intervene, freezing Liberty's assets within the country to prevent their transfer until the obligations are satisfied.
In 2023, the High Court of England recognized an arbitration award that allowed ArcelorMittal to take legal steps to seize Liberty Steel’s assets located in the UK. Following this development, on October 7, 2024, ArcelorMittal filed an application for external administration of Liberty Steel East Europe (Holdco). This move reflects the gravity of the situation, as it indicates ArcelorMittal’s desire to seek a formal restructuring of Liberty Steel’s operations.
Liberty Steel has been struggling significantly in the current steel market downturn. Many of its facilities are either non-operational or running at minimal capacity. Reports suggest that some of its plants in Hungary and the UK have ceased operations altogether. The financial difficulties have been exacerbated by issues such as non-payment of bills, leading to power outages and further operational disruptions.
As part of its recovery strategy, Liberty Steel is now considering the sale of its troubled Liberty Ostrava plant in the Czech Republic, while simultaneously initiating bankruptcy proceedings. Since December 21, 2023, this facility has been idle due to ongoing financial issues, highlighting the dire circumstances faced by the company.
