Government May Intervene in Yorkshire Steelworks to Save Jobs

The UK government is considering taking control of a South Yorkshire steelworks, Specialty Steels UK (SSUK), to preserve production and protect approximately 1,500 jobs. This potential intervention follows revelations in an insolvency court that SSUK, owned by Sanjeev Gupta’s Liberty Steel, is facing significant financial challenges. The company reportedly has millions of pounds in debt, while only £650,000 remains in its bank account.

During a hearing at the Insolvency and Companies Court on Wednesday, Ryan Perkins, representing Greensill Capital, one of the creditors, outlined the dire situation. He stated that restructuring efforts had been unsuccessful and urged the court to issue a compulsory winding-up order for the firm. Perkins suggested that government intervention might be necessary to manage the process effectively.

Contrarily, Gupta has indicated his preference for an alternative solution. Marcus Haywood, speaking on behalf of SSUK, highlighted a lack of clarity from the Department for Business and Trade regarding the company’s future should it be wound up. He warned that a winding-up order could pose a “substantial risk” and lead to the “erosion of any material value” for the business.

Legal Proceedings and Potential Outcomes

The case is set to return to a High Court judge on October 12, 2023, where evidence will be presented regarding SSUK’s ability to continue trading in the event of a winding-up order. Judge Sally Barber acknowledged the significant stakes involved, stating, “There is too much at stake for the court to shoot blind and simply make a compulsory order.” She has adjourned proceedings for two weeks to allow the petitioner and creditors to file additional evidence.

In a statement, a spokesperson for Liberty Steel emphasized that the company’s shareholder has already invested nearly £200 million into the business. They underscored the steel sector’s critical role in supporting the UK’s strategic defence, aerospace, and energy industries. The spokesperson expressed confidence that a commercial solution, supported by major private capital, would provide the best outcome for the business, its employees, and stakeholders without incurring costs to UK taxpayers.

The government has affirmed its commitment to assist the Official Receiver in preparing for potential compulsory liquidation of the company. The situation remains fluid, with the future of SSUK and its workforce hanging in the balance as legal proceedings continue.