In accounting, insolvency is the state of being unable to pay the debts, by a person or company, at maturity; those in a state of insolvency are said to be insolvent. There are two forms: cash-flow insolvency and balance-sheet insolvency.
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.
British Steel is a long steel products business founded in 2016 with assets acquired from Tata Steel Europe by Greybull Capital.
It said that the High Court ordered British Steel into compulsory liquidation the same day, and the Official Receiver was appointed as liquidator.
EY has been appointed as special manager by the Official Receiver.
The company had reportedly been seeking emergency funds of 30 million pounds from the government, blaming “Brexit-related issues” for its difficulties.
The company’s collapse would put its 5000 employees directly and 20000 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.
The government admitted that it has already provided the company with a 120 million pounds 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 during the depths of the steel crisis.