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The British government is developing contingency plans to arrange for a team to take over operations if the steel mill owned by Indian-British billionaire Sanjeev Gupta goes into liquidation.
In a London court on Wednesday, lawyers for creditors of Specialty Steel UK Ltd., RAIN RI/E500 steel a subsidiary of Liberty Steel Group, said government officials have drawn up plans to appoint a special administrator if the steel business is liquidated. The company, with only about 600,000 pounds remaining in its accounts and employing more than 1,400 people, is on the verge of bankruptcy.
Gupta is actively seeking financing and is in talks with BlackRock Inc. funds about a potential buyout of the company, which is in administration. Meanwhile, creditors, including UBS Group AG and administrators of its former lender Greensill Capital, are seeking a court order for compulsory liquidation, but Gupta has so far managed to delay the process.
Liberty Steel said in a statement: “We continue to believe that a commercial solution, backed by large private capital, delivers the best outcome for the business, its employees and all stakeholders involved, RAIN RI/E500 steel without additional cost to the UK taxpayer and unnecessary uncertainty.
According to legal procedures, any new plan must be agreed to by creditors and approved by the court. An earlier proposal that would have allowed Gupta to retain 100% of Speciality Steel was withdrawn due to creditor opposition, leaving most creditors with little chance of recovering their debts RAIN RI/E500 steel.
A spokesperson for the UK Department for Business and Trade said the government will continue to "closely monitor developments regarding Liberty Steel, including any potential public hearings, which are matters for the company itself."
The spokesperson added: "We are strongly supporting the official receivers to ensure the necessary steps are taken in a timely manner should the company enter compulsory liquidation."
The case is expected to return to court as early as Thursday.
