Thursday, February 10, 2022

News: HMRC serves winding up notices on parts of Liberty Steel

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Liberty Steel is lurching nearer to insolvency after HM Revenue & Customs (HMRC) issued a petition to have the speciality steel company wound up.

The company, part of Sanjeev Gupta's GFG Alliance, employs hundreds of staff in South Yorkshire, including in Rotherham. It completed a £100m deal to acquire the Speciality Steels division of Tata Steel UK in 2017.

Sky News and the BBC are reporting that the petition against Speciality Steel UK Limited was issued by the non-ministerial department of the UK Government on Tuesday this week, and is expected to be heard in late March.

The nature of the debts are unknown and overdue accounts are still to be published for many of the connected GFG Alliance companies.

A winding up petition is issued to the courts by those seeking to recover money that they are owed. The courts do not look on it as a debt recovery process, rather that the company can't pay its debts and should be wound up so that liquidation can be used to collect the company's assets.

Statutory demands and winding-up petitions were restricted by the Government to protect companies from creditor enforcement action due to debts related to coronavirus (COVID-19). These restrictions have now ended.

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Rotherham MP, Sarah Champion, said: "The news that HMRC has served winding up notices on parts of Liberty Steel is deeply concerning.

"Steel production is hugely important to Rotherham. Liberty is a key part of our local economy, both through those directly employed in steel production and for those connected to its supply chain. Workers will be understandably worried, and I will be doing all that I can to support them.

"It is vital that the Government engages productively with Liberty to reach a solution that both stabilises the business in the short-term and ensures its long-term viability.

"Both Liberty and the Government must also provide immediate reassurances to workers who are concerned for their livelihoods at what is already an incredibly challenging time.

"Speciality Steels has huge potential, and it must not be sacrificed as a consequence of the difficulties faced by the wider Group. I will be engaging with all parties to secure a solution that protects jobs and the future of steel production in Rotherham."

A spokesperson for the steel unions, Community, Unite and GMB, said: “This action by HMRC threatens thousands of jobs and is a devastating blow to our members and their families. Liberty Steel is a strategically important business, crucial to delivering net zero, and under no circumstances can our plants be allowed to close. The trade unions call on GFG and HMRC to get back round the table and hammer out a deal that provides space for the company to refinance. The best route to protect jobs and repay HMRC and other creditors would be to enable the business to continue to trade.

"Our experts have advised us that with the right framework of support Liberty Steel can have a sustainable future. The government has an important role to play in providing that framework and must take urgent action to address our unaffordable energy prices. GFG is the owner and we hold them accountable for their actions, but as we have always said government must be ready to step in should that be required.”

GFG underwent a restructuring and transformation drive following the collapse of its main lender Greensill Capital, a specialist in invoice financing that operated with less regulation than the traditional banks and that went into administration last year.

As part of this restructuring, Liberty said that it would look to sell its aerospace and special alloys steel business in Stocksbridge, Sheffield but retain its electric arc furnace at Aldwarke in Rotherham.

In October, Liberty Steel restarted production in Rotherham, following an injection £50m of shareholder funds into the business, which it said was running as normal with funding for growth in working capital approved through Liberty Capital. It was restarting operations at night to maximise efficiency and mitigate high energy costs.

Also last year, the Business, Energy and Industrial Strategy (BEIS) Committee was crtical of the "opaque" workings of the business. It followed on from the Government turning down a request for £170m in support.

Liberty Steel website

Images: Liberty Steel

1 comments:

Anonymous,  February 10, 2022 at 3:13 PM  

Sadly inevitable for charlatan Sanjeev Guptha's house of cards. Over to you Boris - show us you didn't actually mean 'F### Business!'

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