Liberty Steels: Government action over troubled firm with Sheffield and Rotherham plants
The Government has taken control of a major steel firm with plants in Sheffield and Rotherham.
Action has been taken at Liberty Steel, which employs over 1,400 people and operates both in Stocksbridge, Sheffield; and in Rotherham.
The High Court confirmed that Speciality Steel - previously part of Sanjeev Gupta's Liberty Steel business - would face a compulsory liquidation.
The operation, will be placed into the hands of the Official Receiver and special managers from advisory firm Teneo.
Ongoing wages and costs to keep the plant running will be covered by the Government until a buyer is found.
However, bosses at Speciality Steel said the move to wind up the business is "irrational".
Jeffrey Kabel , chief transformation officer 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 ( Sanjeev Gupta's parent business) 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."
GFG said it will put forward a bid to retake control of the business alongside debt and equity partners and present this to the Official Receiver.
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."
UK Steel director general Gareth Stace said: "UK Steel welcomes the Government's recognition of the importance of the Liberty Speciality Steel assets and hopes that a new owner is found quickly and can inject the investment and working capital required to return production volumes to previous levels.
"The assets produce high quality, specialist steels that serve high value markets.
"The low production levels of recent years have left significant holes in the domestic supply chain that have been filled by imports.
"We hope to see these holes quickly filled by UK-made steel."
South Yorkshire's Mayor, Oliver Coppard, said: "Today’s news about Liberty Steel is difficult, but offers the opportunity for clarity and a path forward. There is and will continue to be a period of uncertainty for workers at Liberty’s two sites in South Yorkshire.
"So I welcome the positive comments from the Secretary of State for Business in the wake of the Court’s decision. I now want to see swift progress from government to safeguard the unique steel making capabilities we have here in our region.
"I will be seeking a conversation with Ministers as a matter of urgency and will do everything I can to make sure that workers at Liberty Steel and the steel industry that is so integral to our identity, have the brightest possible future."
Unions are calling for the Government to protect jobs at what they see as vital strategic national assets.
A spokesperson for steelworkers' union Community said: "These are worrying developments, and we are seeking clarification on what this means for our members and their livelihoods. Jobs must be protected, and these sites - which are vital strategic assets - need to resume production as soon as possible."
Charlotte Brumpton-Childs, GMB National Officer, 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 Government to take decisive action, as it did with British steel, to protect this vital UK industry.”
Unite general secretary Sharon Graham said: “The government must provide long-term guarantees that it will protect jobs but also the company itself which forms part of the UK’s critical infrastructure.
“The products that Liberty Steel produces are crucial for the success of the UK economy. If the right buyer cannot be found then the government should be prepared to run the company itself and ensure it is ready to meet the challenges of the future.”