The Government could take control of a South Yorkshire steelworks to maintain production and protect 1,500 jobs.
The potential intervention at Specialty Steels 海角视频, which is owned by Sanjeev Gupta’s Liberty Steel, comes as an insolvency court heard the firm has millions of pounds’ worth of debt but only £650,000 in its bank account, a specialist insolvency court has heard.
Ryan Perkins, for Greensill Capital, one of the creditors, told a hearing at the Insolvency and Companies Court on Wednesday that restructuring plans have failed and asked the court to issue a compulsory winding-up order.
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Mr Perkins suggested the Government takes over that process, whereas Mr Gupta favours another option.
Marcus Haywood, for SS海角视频, said a letter from the Department for Business and Trade showed “no firm commitment as to what will happen when this company is wound up today”. He said there is “substantial risk” that a winding up order made by the court “would be extremely destructive and lead to the erosion of any material value”.
The case will return under a High Court judge on Thursday who will hear evidence on whether the company can continue to trade after a winding-up order, because of its industrial significance.
ICC Judge Sally Barber said: “I am going to adjourn for two weeks to give the petitioner the chance, and the creditors, to file some evidence in seven days, stating what happens the other side of the door. There is too much at stake for the court to shoot blind and simply make a compulsory order.”
A Liberty Steel spokesperson said: “Liberty’s shareholder has invested nearly £200m, recognising the vital role steel plays in supplying the 海角视频’s strategic defence, aerospace and energy industries.
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“We continue to believe our commercial solution backed by major private capital provides the best outcome for the business, its employees and all stakeholders concerned without cost to 海角视频 taxpayers or unnecessary uncertainty.”
The Government said it would "We are supporting the Official Receiver so that they are prepared to take the necessary steps should the company enter into compulsory liquidation."