One of Britain’s last remaining steel companies has been forced into compulsory liquidation, placing nearly 1,500 jobs at risk and dealing another devastating blow to the UK’s beleaguered manufacturing sector.
Speciality Steels UK (SSUK), part of metals tycoon Sanjeev Gupta’s troubled Liberty Steel empire, was pushed into liquidation after creditors lost patience with the company’s mounting debts and rejected restructuring proposals. The company, which operates critical steel facilities in Rotherham, Sheffield and other South Yorkshire locations, is Britain’s third-largest steel producer behind Tata Steel and British Steel.
The High Court decision comes despite last-minute attempts by GFG Alliance, Gupta’s parent company, to secure backing from BlackRock, the world’s largest asset manager, for a controversial rescue plan that would have involved shedding hundreds of millions of pounds in tax and other liabilities.
Jeffrey Kabel, GFG Alliance’s chief transformational officer, condemned the decision as “irrational”, arguing that the company had presented a viable commercial solution backed by major investors. 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,” he said.
Instead, Kabel warned, liquidation would “impose prolonged uncertainty and significant costs on UK taxpayers for settlements and related expenses, despite the availability of a commercial solution.”
The collapse marks the latest chapter in the troubled saga of Gupta’s steel empire, which has struggled since the spectacular implosion of its main financier, Greensill Capital, in March 2021. At the time of Greensill’s collapse, GFG Alliance owed the lender approximately £3 billion of its total £4 billion debt pile.
SSUK’s electric arc furnace at Rotherham, which has the capacity to produce more than one million tonnes of steel annually, has been largely idle since July. The facility is crucial for recycling scrap steel into speciality products for the aerospace, defence and energy sectors, making it a strategically important asset for UK manufacturing.
The company supplies major clients including Rolls-Royce and Airbus with highly engineered steel products that are essential for Britain’s defence and aerospace industries. The Dalzell plant in Motherwell, Scotland, produces steel plate critical to the UK’s defence supply chain, including for Royal Navy warships.
Sarah Champion, Labour MP for Rotherham, dismissed GFG’s statement as “full of hollow promises”, accusing the company of starving Liberty Steel of investment for years. “We know Liberty is a golden goose, but one they have starved for years,” she said. The speciality steel we make is unique and in high demand, it makes no financial sense that GFG furloughed the plant for nearly two years.”
Champion expressed confidence that the government would intervene, adding: “Strategically, the government cannot allow Liberty Steel to fail. I am confident they will do all in their power to let it flourish.”
The government has confirmed it is prepared to step in, with special managers from consultancy firm Teneo appointed to oversee operations. Whitehall sources indicated that officials had intensified planning for SSUK’s collapse ahead of Wednesday’s court hearing, with the government agreeing to cover ongoing wages and costs while a buyer is sought.
A Department for Business and Trade spokesperson said: “We continue to closely monitor developments around Liberty Steel, including any public hearings, which are a matter for the company. We support the appointment of an Official Receiver to take necessary action should the company enter compulsory liquidation.”
The liquidation follows months of failed attempts to restructure SSUK’s debts, which total £619 million, including £289 million owed to Greensill’s administrators. The company had been surviving on pre-paid customer orders just to fund raw material purchases, highlighting the precarious state of its finances.
Court documents revealed that Gupta had been pursuing a controversial “connected pre-pack administration” that would have allowed him to potentially buy back the assets after shedding debts. This plan faced fierce opposition from creditors, including HM Revenue and Customs, who viewed it as an attempt to escape legitimate liabilities.
BlackRock had reportedly authorised a financing support letter committing up to £75 million to Liberty Steel UK in the form of an asset-based loan. However, this eleventh-hour backing proved insufficient to convince the court that the company could continue as a going concern.
The collapse of SSUK represents another crisis point for Britain’s steel industry, which has faced years of challenges from global overcapacity, high energy costs and cheap imports. UK steel production in 2024 dropped to its lowest level since the 1930s, prompting government intervention at other facilities.
Earlier this year, ministers were forced to take control of British Steel’s blast furnaces in Scunthorpe to prevent the closure of the UK’s last facility making virgin steel from iron ore. The government used special legislation to step in, raising questions about whether similar action might be taken for SSUK.
Gupta, an Indian-born British businessman who built his empire through a series of acquisitions of distressed steel assets, has seen his business model unravel since Greensill’s collapse. The Serious Fraud Office launched an investigation in May 2021 into “suspected fraud, fraudulent trading and money laundering” relating to GFG Alliance’s financing arrangements with Greensill.
Questions had long been raised about the opacity of GFG’s corporate structure and its reliance on unconventional financing. When Gupta sought government support during the pandemic, ministers rejected his request, citing concerns about the group’s complex and opaque financial arrangements.
Liberty’s shareholder has invested nearly £200 million in recent years, according to GFG, recognising what it calls “the vital role steel plays in supplying the UK’s strategic defence, aerospace and energy industries.” However, critics argue this investment has been insufficient to modernise facilities or secure the company’s long-term future.
The company claimed it had “pursued all options” to make SSUK viable, including efficiency improvements, reorganisations, customer support and “several attempts to find a buyer for the business.” However, these efforts ultimately proved unsuccessful in the face of mounting debts and creditor pressure.
Trade unions have expressed deep concern about the impact on workers, many of whom have faced uncertainty for years. Unite the Union called the situation a “betrayal” of skilled steelworkers who have kept production going despite the company’s financial troubles.
The liquidation of SSUK raises fundamental questions about the future of UK steel production and the country’s industrial strategy. With three major steel companies now either in government hands or facing severe financial distress, the sector’s long-term viability appears increasingly uncertain.
As administrators begin the process of seeking buyers for SSUK’s assets, the focus will be on whether the facilities can be kept operational and jobs preserved. The strategic importance of the sites, particularly for defence and aerospace supply chains, may increase pressure on the government to ensure a solution that maintains domestic steel production capability.
GFG Alliance insists it will continue to advance its bid for the business in collaboration with prospective debt and equity partners, presenting its plan to the official receiver. The company maintains it has “the ideas, management expertise and commitment to lead SSUK into the future and attract major investment.”
However, with creditor patience exhausted and the courts unconvinced by restructuring proposals, the future of one of Britain’s last major steel producers now lies in the hands of government-appointed administrators, marking another dark chapter in the decline of UK manufacturing.
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