EY has been called in to handle the administration of British Steel after last-minute attempts to arrange a rescue deal failed and the government announced the company has gone into compulsory liquidation
The collapse puts over 4,000 jobs at risk at its plants, together with many thousands more in the supply chain.
The Official Receiver has been appointed as liquidator at the High Court, and 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.
British Steel indicated it was in serious financial trouble earlier this year, borrowing £100m from the government to cover an EU carbon bill last month.
The manufacturer said Brexit uncertainties, which were delaying its ability to claim a refund on the bill, were a critical problem, and were also hitting its customers’ confidence, with no orders booked beyond October. The company was seeking an additional loan of between £30m and £75m.
In a statement the Office Receiver said: ‘The immediate priority following my appointment as liquidator of British Steel is to continue safe operation of the site.
‘The company in liquidation is continuing to trade and supply its customers while I consider options for the business. Staff have been paid and will continue to be employed.
‘The court also appointed special managers to assist me with my work and they are engaging with staff and their representatives to keep them informed, as well as contacting British Steel’s customers.’
Speaking ahead of confirmation of the administration, Joanna Ford, a partner at law firm Cripps Pemberton Greenish, said: ‘British Steel’s latest financial troubles come only three years after it was rescued by PE firm Greybull Capital when Tata Steel pulled out of the UK market.
'It is a further sign that the uncertainty around Brexit is causing real damage to UK businesses.’
Commenting on the collapse, business secretary Greg Clark said: ‘The government has worked tirelessly with British Steel, its owner Greybull Capital, and lenders to explore all potential options to secure a solution for British Steel.
‘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 a statement, EY said: 'British Steel is a world leading producer and supplier of quality long steel products which is recognised globally. It is also a strategic supplier to a number of important industries, including rail, automotive and construction.
'The appointment of the Official Receiver provides the companies with additional funding and thus stability whilst a sales process to secure a buyer is conducted. During this time, British Steel will continue to trade as normal and we look forward to the support of customers, suppliers and employees to ensure a successful outcome.'