Liberty tells customers to ignore Grant Thornton

Liberty Steel has told customers to continue making payments to it, rather than Greensill administrator Grant Thornton, according to a letter obtained by Argus.

Under its receivables programme with Greensill, Liberty was the collection agent, which is atypical for supply chain finance arrangements. This meant Liberty would take collection from its customers, even though it had already sold the invoices to Greensill, and then repay the money. Liberty often repaid Greensill a month or so after receiving customer payment, which was known as "the stretch" by some within the company.

Grant Thornton had sent a letter to Liberty customers saying they should make payment direct instead, rather than paying Liberty. The Greensill administrator was concerned the cash would be used within the business, given current working capital constraints, rather than being passed on.

Liberty told customers in its letter they should continue to make payment as usual. "We dispute Greensill's right to send these notices to our customers and we are engaging with Grant Thornton as a matter of urgency in relation to them," the letter, from chief commercial officer Michael Horan, said.

Liberty notes in the letter that the court order Grant Thornton sent to customers just confirmed it was the administrator of Greensill, and did not compel customers to pay the administrators directly.

"Our main concern at the current time is our employees and customers such as yourselves and we are doing everything possible to stop actions by Greensill that we consider damaging to our business and our customers," the letter said.

The wrangling between the parties has presented a headache for customers, some of whom are consulting external legal advice as to how to proceed.

Liberty chief executive Sanjeev Gupta has said publicly that the company has a three-year committed facility with Greensill, so in its view no payment is necessary at present.

By Colin Richardson