Steel magnate Sanjeev Gupta is making a final effort to save his UK operations after his urgent request for government assistance was declined.
According to Sky News, Gupta’s Liberty Speciality Steels UK (SSUK) is asking to postpone a winding-up petition that is set to be heard in court on Wednesday.
This petition is reportedly filed by Harsco Metals Group, a supplier to SSUK, and is believed to have the backing of other trade creditors.
If the adjournment is not approved, Gupta risks having SSUK subjected to compulsory liquidation.
This scenario could jeopardize around 1,450 jobs in the steel sector, following the government’s recent intervention to rescue British Steel amidst a dispute with its Chinese owner regarding Scunthorpe’s steelworks.
Should Gupta’s businesses undergo compulsory liquidation, the Official Receiver would appoint a special manager to oversee operations while a buyer is identified.
A source within Whitehall indicated that discussions had recently occurred between Gupta’s team and the Insolvency Service.
Sources within the steel industry suggested that the government might consider reuniting SSUK’s Rotherham site with British Steel’s Scunthorpe location due to potential industrial synergies, though it remains uncertain whether any such talks have taken place.
Gupta has reportedly sought to convince the government to support SSUK using new legislation that was enacted last month to take control of British Steel’s operations.
However, Whitehall insiders stated that Gupta’s proposals had been turned down.
Previously, he had requested government support during the pandemic, but that was also declined by ministers.
The SSUK division operates across locations including Rotherham in South Yorkshire and Bolton in Lancashire.
It manufactures highly engineered steel products for industries such as aerospace, automotive, and oil and gas.
A restructuring plan intended to be launched last week was abruptly cancelled after failing to garner support from creditors of Greensill, the collapsed supply chain finance firm closely connected to Gupta.
The plan would have required creditors, including HM Revenue and Customs, to write off a substantial portion of their debts.
The company revealed last week that it had invested nearly £200 million in the UK steel sector over the past five years, facing “significant challenges due to rising energy costs and an overdependence on cheap imports, adversely affecting the performance of all UK steel firms.”
It adds: “The court’s ability to approve the plan relied on finalizing an agreement with creditors.
This was not achievable in an acceptable timeframe, prompting Liberty to withdraw the plan ahead of the sanction hearing on May 15 and to consider alternative options swiftly.”
One source close to Liberty Steel admitted that time was running out to save the business.
However, they noted that postponing Wednesday’s hearing regarding the winding-up petition could provide the company with crucial time to formulate an alternative rescue strategy.
A spokesperson for Liberty Steel stated on Tuesday: “Discussions with creditors are ongoing.
Liberty recognizes the concerns this situation will raise for Speciality Steel UK employees and remains committed to doing everything it can to sustain the Speciality Steel UK business.”
The Insolvency Service has also been asked for a comment.
A representative from the Department for Business and Trade stated: “We are closely monitoring developments surrounding Liberty Steel, including any public hearings, which are ultimately the company’s responsibility.
It is up to Liberty to handle its commercial decisions regarding the future of its companies, and we hope it succeeds in its plans for a sustainable future.”