One of the UK’s last remaining steel companies has been pushed into compulsory liquidation.
Speciality Steels UK (SSUK), part of the Liberty Steel empire owned by metals tycoon Sanjeev Gupta, employs nearly 1,500 people at sites in Rotherham and several other locations across South Yorkshire.
Behind Tata Steel and British Steel, it is the third-largest steel producer in the country.
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Sky News reported that negotiations had been underway for a deal to rescue the firm, however, they seem to have been rendered unsuccessful.
The government-run Insolvency Service confirmed it will be acting as the liquidator. It added that Teneo Financial Advisory Limited would be assisting run the company from now on.
While the GFG Alliance, the holding company, says it is disappointed by the decision, local politicians and unions are highly critical of the group.
The government says wages will continue to be paid by the liquidator. A spokesperson adds that the government is still “committed to a bright and sustainable future for steelmaking and steel making jobs in the UK”.
Financial assistance was not able to given to SSUK by the government due to its existing financial and corporate challenges, including ownership and management.
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In a statement today, GFG’s chief transformational officer, Jeffrey Kabel said: “The decision to push Speciality Steel UK into compulsory liquidation, especially when we have support from the world’s largest asset manager to resume operations and facilitate creditor recovery, is irrational.
“The plan that GFG presented to the court would have secured new investment in the UK steel industry, protecting jobs and establishing a sustainable operational platform under a new governance structure with independent oversight.
“Instead, liquidation will now impose prolonged uncertainty and significant costs on UK taxpayers for settlements and related expenses, despite the availability of a commercial solution.
“Liberty has pursued all options to make its SSUK viable, including efficiency improvements, reorganisations, customer support, several attempts to find a buyer for the business and intensive negotiations with creditors to restructure debt liabilities. Liberty’s shareholder has invested nearly £200m, recognising the vital role steel plays in supplying the UK’s strategic defence, aerospace and energy industries.
“GFG will now continue to advance its bid for the business in collaboration with prospective debt and equity partners and will present its plan to the official receiver. GFG continues to believe it has the ideas, management expertise and commitment to lead SSUK into the future and attract major investment. GFG’s other significant business interests in the UK remain unaffected.
“Despite many challenges facing the group and the difficult market conditions, GFG has invested over £2bn into the UK economy since 2013, ensuring the survival of many GFG businesses despite operating losses and safeguarding thousands of jobs that would otherwise have been lost.”
Business and economics correspondent
The collapse of Speciality Steel UK (SSUK), the UK’s third-largest steel producer, did not come as a surprise to government officials, who have in recent days been planning for this outcome.
After all, the business has been limping on for some time, weighed down by financial mismanagement and a mounting debt pile. Problems began in 2021 for GFG Alliance – the holding company, which is a conglomerate run by the metals magnate Sanjeev Gupta. Its main lender, Greensill Capital, collapsed with £3.7bn of loans to GFG still outstanding. Greensill is still trying to recover the money.
There have been legal claims and probes since then, although GFG denies any wrongdoing. The true scale of SSUK’s financial woes are not even known because the company has not filed audited accounts for more than five years. Sanjeev Gupta is being prosecuted for failing to file accounts for many of his other businesses too.
SSUK’s creditors pushed for the company’s liquidation but the government was braced to step in. However, the development does little to provide certainty for the business’s 1,500 workers in South Yorkshire.
The government will cover wages and costs for now but, as a letter sent by the Department for Business and Trade made clear earlier this month, the government has no intention to “own SSUK.” As with British Steel, which collapsed back in April (albeit for different reasons), the government is stepping up but is hoping a new buyer will be found soon.
Sarah Champion, the Labour MP for Rotherham, said GFG’s statement was “full of hollow promises”.
She added: “We know Liberty is a golden goose, but one they have starved for years.
“The speciality steel we make is unique and in high demand, it makes no financial sense that GFG furloughed the plant for nearly two years.
“Strategically, the government cannot allow Liberty Steel to fail. I am confident they will do all in their power to let it flourish.”
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Charlotte Brumpton-Childs, the national officer for the GMB union, also attacked GFG.
She said: “This is another tragedy for UK steel – and the people of South Yorkshire – this time brought on by years of chronic mismanagement by the owners.
“But this represents an opportunity for the UK government to take decisive action – as it did with British Steel – to protect this vital UK industry.”
A government spokesperson said: “We know this will be a deeply worrying time for staff and their families, but we remain committed to a bright and sustainable future for steelmaking and steel making jobs in the UK.
“It is now for the independent Official Receiver to carry out their duties as liquidator, including ensuring employees are paid, while we also make sure staff and local communities are supported.”
