The UK government has taken control of the country’s third-largest steelworks as near 1,500 workers face uncertainty.
Speciality Steels UK (SSUK), which owns major sites such as Liberty Steel in Rotherham, South Yorkshire, was put into compulsory liquidation after insolvency courts granted a winding-up order sought by creditors.
The creditors said they were owned hundreds of millions of pounds by the company.
SSUK will now be handled by the Official Receiver – a public official who deals with bankruptcies. Special managers from consulting firm Teneo have also been appointed to run it on behalf of the liquidator.
The government has said it will cover staff wages and ongoing costs of the plant whilst a buyer is sought.
Labour’s move to take control of the steelworks site follows the government stepping in to save British steel, which landed the taxpayers with a £900m bill.
Liberty Steel’s monthly wage bill is £3.7m.
It comes as Chancellor Rachel Reeves already battles a depleted fiscal headroom after government U-turns on welfare reforms and a £190bn Spending Review splurge cut into the public purse.
City analysts expect Reeves to hike taxes in the Autumn Budget to restore her eroded headroom. The National Institute of Social and Economic Research have said the Chancellor would need to raise taxes to the tune of £50bn in order to do so.
Liberty Steel owners hit back after collapse
Liberty Steel has fiercely opposed the moves to put the firm into compulsory liquidation branding it “irrational”.
The company’s chief transformation officer Jeffrey Kabel said it would “impose prolonged uncertainty and significant costs on UK taxpayers for settlements and related expenses, despite the availability of a commercial solution”.
However a judge branded the company “hopelessly insolvent” with just £600,000 in the bank. The firm’s parent group GFG Alliance – headed up by metals tycoon Sanjeev Gupta – already faces insolvency proceedings at 15 of its entities.
Gupta owns a fleet of businesses in energy, trading and steel which employ thousands across the UK.