Under the agreement, all enforcement actions are paused between the parties over the Greensill Bank debt facilities until October - and may be extended until the end of 2022, Liberty said.
The agreement is intended to enable the firm to ‘develop a longer term sustainable financing structure’.
Detailed due diligence and information exchange continues between the two parties.
Liberty Steel is a manufacturer of complex steel for the aerospace and energy sector and has operations across the country including in Rotherham, Stocksbridge, Scunthorpe, West Bromwich and Kidderminster.
In April the business, which is owned by Sanjeev Gupta’s Gupta Family Group Alliance, confirmed it would be cutting 207 jobs, as the business looked to restructure and recover from a turbulent period that started with the collapse of Greensill Capital, its key lender.
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A Liberty Steel Group spokesman said: “Today’s standstill agreement with Greensill Bank demonstrates we are getting close to a consensual debt restructuring that is in the best interests of all our stakeholders.
“We are working intensively towards a settlement with our major creditors in a timeframe which would obviate the need for a legal battle.
“Our core businesses continue to perform well and are operationally strong despite some economic headwinds.”
In March, the immediate threat of closure at Liberty sites in South Yorkshire was lifted after HMRC withdrew a ‘winding up’ petition.
The new announcement will be a relief to 2,000 workers at Liberty sites in Rotherham and Stocksbridge.