According to a court announcement, new administrators have been appointed to take control of Speciality Steels UK (SSUK), a Liberty Steel-owned facility in South Yorkshire. The company, which produces steel using scrap metal, has faced ongoing uncertainty due to its mounting unpaid debts, putting it at risk of liquidation.
This development comes after the government earlier this year took control of the British Steel plant in Scunthorpe to prevent the closure of the country’s last remaining primary steel production facility. SSUK hosts the UK’s largest electric arc furnace, known for its greater energy efficiency and expected to play a key role in the steel industry's energy transition.
However, the company has long struggled with financial difficulties. The collapse of Liberty Steel’s main lending institution and growing unpaid debts have made it impossible for the company to purchase the scrap metal needed for steel production.
The fate of SSUK now rests with a judge in the High Court. Lawyers for Sanjeev Gupta, chairman of Liberty Steel’s owner GFG Alliance, warned that a potential liquidation order could spell the end of steel production at the plant. Gupta’s legal team has requested a postponement to allow the administrative process to be completed and argued this would avoid the need for direct government intervention.
Creditors’ lawyers, however, submitted a letter from the government to the court, providing assurances that the steelworks could be taken over if necessary. Creditors, who are owed hundreds of millions of pounds, have petitioned the court to force the company into liquidation so its assets can be sold to repay debts.
GFG Alliance, which operates in the energy, trade, and steel sectors and employs thousands across the UK, has been under scrutiny since the 2021 collapse of its main lender, Greensill Capital. Sources close to Gupta have confirmed ongoing talks with investment giant Blackrock to provide new funding to acquire the company through a managed process known as a “pre-pack” administration.
While the government supports policies to back the steel sector, it has repeatedly rejected direct financial aid requests from Sanjeev Gupta. As a result, two difficult options lie ahead: allowing Gupta to retain control of the company, which would likely see much of the creditors’ debts written off but avoid costs to the government; or the government taking over the loss-making steelworks to ensure creditors are paid, a process that could be both costly and lengthy.
In a statement, the government emphasized: “We will continue to closely monitor developments regarding Liberty Steel, including public hearings. We support the appointment of an Official Receiver to take necessary action should the company enter compulsory liquidation.”
Liberty Steel responded, saying, “Our commercial solution, supported by major private equity, will deliver the best outcome for the company, employees, and all stakeholders, without costing UK taxpayers or causing unnecessary uncertainty.”
Source: BBC
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