Sheffield steel: Speciality Steel creditors urged to 'substantially' write off £618m debt to save 1,500 jobs
Crisis-torn Speciality Steel UK - which has plants in Sheffield and Rotherham - has debts of £618m, court documents show.
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 huge sum is laid out in a High Court judgement which authorised meetings with creditors to avoid “immediate liquidation.”
Speciality Steel, a division of Liberty Steel, employs hundreds at works in Rotherham and Stocksbridge, Sheffield.
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.
The creditors’ meetings are set to be held this month.
If the restructuring plan is agreed, steel bosses hope it will clear the way to “securing fresh capital” enabling Liberty to rebuild - and could see Rotherham’s furnace restart in coming months.
Speciality Steel UK is among scores of companies owned by parent company GFG Alliance, led by Sanjeev Gupta.
GFG Alliance borrowed millions from Greensill Capital to pay suppliers. Greensill collapsed in March 2021 but creditors, including investment bank UBS, are still trying to get at least some of their £288m back.
Last month, a steelworker claimed the South Yorkshire plants have “stood idle” for months and are in “such a state of disrepair it will take investment to return them to operational standards.”
Writing in December, Mr Justice Hildyard said Greensill Creditors welcomed “some indication of progress” but “they are nowhere close to a landing on what is proposed.”
This week, a Liberty spokesperson said: “We have recently entered into a term sheet with the Greensill creditors which we are currently negotiating into a binding restructuring agreement covering all disputed debts and claims between the parties.”
A spokesperson for Aviva said, “Due to the ongoing legal proceedings, it wouldn’t be appropriate for us to comment on the details of the case. However, we have robust due diligence processes in place to protect our customers’ pension contributions and savings.”