British Steel, the country’s second largest steel producer has entered into compulsory liquidation, said British government’s Insolvency Service in a press release on Wednesday.
It said that the High Court ordered British Steel into compulsory liquidation the same day, and the Official Receiver was appointed as liquidator.
“The immediate priority following my appointment as liquidator of British Steel is to continue safe operation of the site,” said the Official Receiver in a statement.
EY has been appointed as special manager by the Official Receiver.
“The company in liquidation is continuing to trade and supply its customers while I consider options for the business,” the Official Receiver said, “Staff have been paid and will continue to be employed.”
The company had reportedly been seeking emergency funds of 30 million pounds (about 38 million U.S. dollars) from the government, blaming “Brexit-related issues” for its difficulties.
The company’s collapse would put its 5,000 employees directly and 20,000 more in the supply chain at risk, local media reported.
Business Secretary Greg Clark called it a “deeply worrying time” for employees and local communities in a statement on British Steel Wednesday.
However, he noted, “The government can only act within the law, which requires any financial support to a steel company to be on a commercial basis. I have been advised that it would be unlawful to provide a guarantee or loan on the terms of any proposals that the company or any other party has made.”
“In the days and weeks ahead, I will be working with the Official Receiver and a British Steel support group of management, trade unions, companies in the supply chain and local communities, to pursue remorselessly every possible step to secure the future of the valuable operations in sites at Scunthorpe, Skinningrove and on Teesside,” he added.
The government admitted that it has already provided the company with a 120 million pounds (152 million dollars) bridging facility to enable it to meet its emissions trading compliance costs.
In 2016, Private equity group Greybull Capital purchased the company from Tata Steel for a nominal 1 pound (1.27 dollars) during the depths of the steel crisis.