Britain's 2nd biggest steel maker enters insolvency

Britain's 2nd biggest steel maker enters insolvency

The High Court ordered British Steel Ltd into compulsory liquidation on May 22, with the Official Receiver appointed as liquidator.

Prime Minister Theresa May told parliament on Wednesday the Treasury had "agreed an indemnity for the official receiver to enable British Steel to continue to operate in the immediate future".

Hunter Kelly, Sam Woodward and Alan Hudson of EY have been appointed to act as special managers to assist the Official Receiver with his duties in relation to British Steel, including engaging with staff and contacting the steelmaker's customers.

The company had reportedly been seeking emergency funds of 30 million pounds (about 38 million US dollars) from the government, blaming "Brexit-related issues" for its difficulties.

The firm's uncertain future leaves 5,000 jobs at risk plus a further 20,000 in the supply chain.

Mr Speaker, this is a very worrying time for everyone associated with British Steel.

The company had earlier sought financial assistance to the tune of 30 million pounds ($38 million, €34 million) from the British government to remain afloat, but the request was rejected.

Business secretary Greg Clark made much of his advice that it "would be unlawful to provide a..."

The insolvency removes Greybull from day to day control of British Steel.

"The collapse of British Steel would be devastating for thousands of jobs in Scunthorpe, as well as in the wider supply chain", opposition Labour Party leader Jeremy Corbyn wrote on Twitter.

In May, Greybull Capital asked the Government for £75m to keep British Steel in business, this after the government loaned it £120m in April to cover its European Union emissions liabilities.

Britain's second largest steelmaker was wound up by the high court this morning, in a move that threatens thousands employed at Scunthorpe's huge steel plant and hundreds more on Teesside.

Talks with the government failed to secure a bailout, and the Insolvency Service announced the liquidation on Wednesday.

Roy Rickhuss, general secretary of the steelworkers' trade union, Community, said: "This news will heap more worries on workers and everyone connected with British Steel, but it will also end the uncertainty under Greybull's ownership and must be seized as an opportunity to look for an alternative future".

"Ministers can not wash their hands of the Brexit farce and ongoing uncertainty that has placed the company in difficulty".

In the event of a hard Brexit, Britain would leave the ETS so the government has not issued any free permits for 2019 to help companies comply with the scheme.

One such supplier is AIM-listed Hargreaves Services, which has provided materials handling for British Steel for almost eight years and employs 170 people - some of whom will be made redundant if the industrial giant ceased trading.

"The £30m bail-out it required from the Government was relatively small change compared to the large amounts the Treasury has had to pay out to support other struggling businesses in recent years".

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