Sheffield steel: Fears for debt-ridden Speciality Steel UK after recovery plan ditched before court hearing
There are fears for the future of Liberty Specialty Steel UK today after a recovery plan was ditched a day before it was due to be decided in court.
Bosses at the firm - which employs 1,500 in Rotherham and Stocksbridge - announced they would “quickly consider alternative options,” after withdrawing a plan they had been working on for six months.
In a note to workers, Liberty Steel's chief transformation officer Jeffrey Kabel said they had been seeking court approval to reduce liabilities to creditors since November.
He added: “The court's ability to sanction the plan depended on finalisation of an agreement with creditors. This has not proved possible in an acceptable timeframe and so LIBERTY has decided to withdraw the plan ahead of the sanction hearing on May 15 and will now quickly consider alternative options.
“We will update you further next week on our progress regarding the options we are pursuing. We remain committed to working with all stakeholders, including unions, to find a solution in the best interests of all Speciality Steels colleagues.”
A Speciality Steel UK worker, who asked not to be named, said the firm faced an uncertain future.
He added: “Not sure if the government will step in and save us or take the reigns or whether closure and asset stripping is imminent.
“As far as I'm aware the judge now has nothing to sanction so will support the creditors who brought the winding up order on us, which will be brought into effect unless there’s a miracle in the next 24 hours.
“Either way we are left with no pension payments since September and our future unknown.”
The company operates two electric arc furnaces in Rotherham, producing specialty and engineering steel, as well as high value-added products in Stockbridge, particularly for the aerospace sector.
In March, The Star reported that Speciality Steel UK had debts of £618m, according to court documents.
The business owes £289m to lender Greensill Capital, £288m to sister companies, £23m to unsecured creditors, £10m to another lender and £7.7m in tax to HMRC.
The sum was laid out in a High Court judgement which authorised meetings with creditors to avoid “immediate liquidation.”
The firm’s financial woes saw wages paid late in January and October. Pension payments to Aviva have not been made since September and many workers are on furlough due to a lack of orders.
The company has drawn up a restructuring plan which would see some creditors “sacrificed in the interests of keeping this company alive,” judge Mr Justice Hildyard, said.
The alternative would be the closure of five steel plants - in Rotherham, Stocksbridge, Brinsworth, Bolton and Wednesbury - which would be a “very grievous blow against the employees and also the local communities,” he added.