UK Court Orders Winding Up of Speciality Steel UK

Afte the closure of Brith Steel early this year, another steel producer Speciality Steel UK (SSUK) has entered into administration and placed under the control of special managers appointed by the government’s official receiver following a winding down petition in the UK High Court on Thursday.

The South Yorkshire based company is the UK’s third-largest steelworks is part of the Liberty Group which is owned by Gupta family Group (GFG). The company had only $871,614.25 in the bank after running down its reserves, and a wage bill of $4,83 million due on Friday (August 22).

The High Court has appointed Gareth Jonathan Allen as the Official Receiver and following an application made by the Official Receiver, the court has also appointed Matthew James Cowlishaw, Hywel Phillips and Robert Fishman of Teneo Financial Advisory Limited as Special Managers of the company. The Special Managers will assist the Official Receiver with the liquidation.

The Official Receiver will wind-up the company in accordance with his statutory duties. He also has a duty to inquire into the cause of the company’s failure and conduct of current and former directors, the UK government said.

The company employs around 1,450 people within the Speciality business and provides a wide range of specialist steel products. Industry watchers are attributing the company’s winding up due to the US Trade Policies.

Speciality Steels provides vital steelmaking capacity in aerospace, defence and power generation. The steel made by Liberty Speciality Steels can be found in vessels including aircraft carriers, military aircraft components and defence systems, landing gear, controls and in components for oil and gas, power generation, rail and beyond.

UK Steel Director General Gareth Stace said that the 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.

He said that the assets produced high quality, specialist steels that served 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 and hoped to see these holes quickly filled by UK-made steel.

“The Government must continue to push on trade defence and reducing the burden of energy costs so that the Speciality Steels business, and the rest of the UK steel ecosystem, is sustainable, and steel workers will in future be spared from the limbo state that the employees in South Yorkshire have endured,” Gareth added.

Decision Decried

Liberty Steel Group’s Chief Transformation Officer Jeffrey Kabel said that the decision to push Speciality Steel UK into compulsory liquidation, especially when they were supported by the world’s largest asset manager to resume operations and facilitate creditor recovery, was irrational.

The plan that GFG 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,” Kabel said.

According to Kabel, Liberty has pursued all options to make its SSUK viable, including efficiency improvements, reorganisations, customer support, several attempts to find a buyer for the business and intensive negotiations with creditors to restructure debt liabilities.

LIBERTY’s shareholder has invested nearly $268.19 million, recognising the vital role steel plays in supplying the UK’s strategic defence, aerospace and energy industries.

GFG will now continue to advance its bid for the business in collaboration with prospective debt and equity partners and will present its plan to the official receiver. GFG continues to believe it has the ideas, management expertise and commitment to lead SSUK into the future and attract major investment.  GFG’s other significant business interests in the UK remain unaffected.

Despite many challenges facing the group and the difficult market conditions, GFG has invested over $2.68 billion into the UK economy since 2013, ensuring the survival of many GFG businesses despite operating losses and safeguarding thousands of jobs that would otherwise have been lost, Kabel added.