Liberty Bell Bay may have been insolvent for more than a year before closing

The administrators of the Liberty Bell Bay manganese smelter believe the company had been insolvent since May last year, months before the Tasmanian government loaned it $20 million.The smelter in northern Tasmania was placed into administration in March and officially closed last week, leaving about 200 workers without jobs. Liberty Bell Bay was part of GFG Alliance, which is owned by Sanjeev Gupta.In its voluntary administrators' report, EY Parthenon identified that Liberty Bell Bay may have been insolvent."The Administrators are of the view that the Company was insolvent from as early as 1 May 2025," it stated.The company was given a $20 million loan from the state government in August 2025, $14 million of which was used to buy one 23,000-tonne shipment of ore.The Tasmanian government provided a loan that enabled the smelter to buy a shipment of ore. (ABC News: Maren Preuss)The report estimated that Liberty Bell Bay owed creditors between $70 million and $300 million, including $27 million owed to employees:$661,000 in superannuation$2 million in annual leave$2.5 million in long service leave$22 million in redundancy and pay in lieu of noticeA company is deemed insolvent when its debt cannot be paid.Some of the administrators' reasons for identifying the insolvency included:Yearly revenue dropped from $172 million in the 2024-25 financial year, to $11 million in 2026Consistent operating losses since 2022-23Aged payables exceeding 60 days increased from 18 per cent of total payables in 2023-24, to 86 per cent in 2026"Our preliminary estimate of a claim for insolvent trading is in the order of approximately $25 million, if proven," the report stated.The report found that Liberty Bell Bay incurred net losses in 2022-23 of $21 million and in 2024-25 of $80 million.Deputy Premier Guy Barnett said it was a concern that Liberty Bell Bay may have been insolvent before receiving the loan from the state government."The administrators have highlighted the absolute irresponsible behaviour of Sanjeev Gupta and GFG," Mr Barnett said."Our security is the ore … and that is why that due diligence was undertaken and that security was locked in on behalf of the tax payers."We put everything on the table that we possibly could."Inter-company loansThe report also confirmed previous reports that GFG Alliance had moved about $200 million out of Liberty Bell Bay via inter-company loans.The administrators found that the net inter-company loan balance was $191 million."Cash outflows to related parties … have meant that the Company has had very limited cash resources to withstand supply chain difficulties and commodity price fluctuations which have impacted profitability," the report stated.A creditors meeting will be held on August 3 to resolve whether the company will be wound up, and if so, whether it wants to appoint a liquidator.