LONDON – British Steel Ltd., the United Kingdom’s second-largest steelmaker, has started insolvency proceedings after the country’s High Court ordered its compulsory liquidation, endangering thousands of jobs.
The High Court in London appointed the Official Receiver, a civil servant employed by the Insolvency Service of the UK, to oversee the proceedings.
“The company in liquidation is continuing to trade and supply its customers while I consider options for the business,” the receiver said in a statement. “Staff have been paid and will continue to be employed. The court also appointed Special Managers to assist me with my work and they are engaging with staff and their representatives to keep them informed, as well as contacting British Steel’s customers,” the statement added.
The receiver will be assisted by international accounting firm Ernst and Young, which will act as the special manager, the statement said.
“The Court has appointed Hunter Kelly, Sam Woodward and Alan Hudson of EY to act as Special Managers to assist the Official Receiver with his duties as liquidator,” the statement said.
During liquidation, British Steel – which is owned by investment company Greybull Capital – is continuing to trade and supply its customers, who in turn are being contacted by Ernst and Young as the process continues.
Talks with the government ground to a halt over concerns that a requested loan would be illegal.
UK Business Secretary, Greg Clark, said the government had worked with the company to try and secure a solution.
Clark said the British government had shown its willingness to act with an earlier bridging facility worth 120 million pounds ($152.6 million) to meet its emissions trading compliance costs.
Gareth Stace, the director general of trade association UK Steel, said the news is a significant blow for the company and communities across the UK.
Stace said options remain on the table, with time available to find a new buyer for the company. He said steel demand and consumption across the world remains positive.
“The immediate priority following my appointment as liquidator of British Steel is to continue safe operation of the site,” the receiver’s statement said. “I appreciate that this a difficult time for the company’s employees and I want to thank them for their ongoing cooperation.”