The government has taken control of the UK’s third-largest steelworks as ministers try to protect 1,450 jobs after Liberty Steel’s operations in South Yorkshire were put into administration.
The high court in London said on Thursday that Speciality Steel UK (SSUK), which has plants in Rotherham and Stocksbridge, would be wound up, despite the company’s request for more time to find new financial backers.
The company, previously part of the metals tycoon Sanjeev Gupta’s Liberty Steel group, was put under the control the government’s official receiver who appointed special managers from the advisory firm Teneo to run it.
The judge, Mr Justice Mellor, said there was too much uncertainty over whether Gupta could come up with funding. “It is quite clear that there are special managers lined up who have the support of the government,” he said. “I consider by far the preferable approach is to make a winding-up order.”
The steelworks and its workers have been described by the business minister, Jonathan Reynolds, as important strategic assets for the UK.
The government has said it has received approaches from “independent third parties who have expressed an interest in returning some or all of the sites to steelmaking”, according to a letter from the Department for Business and Trade entered in court.
It also indicated that it hoped for a buyer who would restart production at Rotherham, where no products have been made for a year.
The development marks the second government intervention in the steel industry this year, after ministers took control of British Steel’s Scunthorpe plant, fearing that its Chinese owners would let the blast furnaces cool beyond repair.
Unions said the government needed to protect the company. Charlotte Brumpton-Childs, national officer for the GMB union, 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.”
Indian-born Gupta was once known as the “saviour of steel” for his plans to turn around struggling operations. From a business founded as a student at the University of Cambridge he built up a collection of assets spanning the UK, eastern Europe and Australia.
However, he had been scrambling to find new financing for his businesses since the collapse in 2021 of Greensill Capital, which had lent his Gupta Family Group (GFG) Alliance business about $4.5bn (£3.3bn). Administrators for Greensill are trying to recover that money on behalf of creditors, including the US lender Citibank, which is owed £233m.
GFG Alliance has also been under investigation by the UK’s Serious Fraud Office since 2021 over allegations of “fraud, fraudulent trading and money laundering in relation to the financing and conduct of the business”, including in relation to Greensill.
Gupta, who is based in the United Arab Emirates, had already lost control of businesses in the UK, Europe, Singapore and Australia. However, SSUK is his key metals asset in the UK, where he also bought two large country estates.
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Jeffrey Kabel, Liberty Steel’s chief transformation officer, said Gupta was in Sydney, managing GFG’s remaining Australian business. He said the case had left Gupta “sad, because he’s put a lot into this”.
Outside the courtroom after the judgment Kabel said he was “extremely disappointed”. “We are by far the best company to run this business. We’ve run this company for 10 years. We’ve put a lot of blood, sweat, huge amount of money into it.”
Kabel said Liberty will continue to operate the rest of its UK businesses, including a plate mill and aluminium smelter in Scotland, plus a pipe mill in Hartlepool.
The special managers will seek to keep the business operating, with temporary government funding, before trying to find a buyer which will cover those costs. Kabel raised the prospect of Gupta trying to mount a bid to buy back the business from the special managers, although it was unclear whether he would be able to secure financing.
Gupta’s lawyers had pushed for him to be allowed another month to try to pursue a “pre-pack” administration of the business, which would have enabled him to buy it out of insolvency while reducing its debts. The pre-pack administration was prepared by the insolvency consultancy Begbies Traynor and would have been funded by BlackRock, the world’s largest investment manager.
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 steelmaking 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.”