The Government has seized control of Britain's third-largest steelworks in an attempt to safeguard 1,450 positions at the facility.
The High Court confirmed on Thursday that Speciality Steel – formerly part of Sanjeev Gupta's Liberty Steel empire – would enter compulsory liquidation.
The operation, encompassing facilities in Rotherham and Stocksbridge in South Yorkshire, will be transferred to the Official Receiver alongside special managers from consultancy firm Teneo. The Government will fund continuing salaries and operational expenses to maintain plant operations whilst seeking a purchaser.
Nevertheless, executives at Speciality Steel branded the decision to dissolve the company as "irrational".
Jeffrey Kabel, chief transformation officer said: "The decision to push Speciality Steel º£½ÇÊÓƵ into compulsory liquidation, especially when we have support from the world's largest asset manager to resume operations and facilitate creditor recovery is irrational.
"The plan that GFG (Sanjeev Gupta's parent business) presented to the court would have secured new investment in the º£½ÇÊÓƵ steel industry, protecting jobs and establishing a sustainable operational platform under a new governance structure with independent oversight. Instead, liquidation will now impose prolonged uncertainty and significant costs on º£½ÇÊÓƵ taxpayers for settlements and related expenses, despite the availability of a commercial solution."
GFG has announced its intention to submit a bid to regain control of the business, in partnership with debt and equity partners, to the Official Receiver.
A Government spokesperson commented: "We know this will be a deeply worrying time for staff and their families, but we remain committed to a bright and sustainable future for steelmaking and steel making jobs in the º£½ÇÊÓƵ. It is now for the independent Official Receiver to carry out their duties as liquidator, including ensuring employees are paid, while we also make sure staff and local communities are supported."
º£½ÇÊÓƵ Steel director general Gareth Stace stated: "º£½ÇÊÓƵ Steel welcomes the Government's recognition of the importance of the Liberty Speciality Steel assets and hopes that a new owner is found quickly and can inject the investment and working capital required to return production volumes to previous levels.
"The assets produce high quality, specialist steels that serve high value markets. The low production levels of recent years have left significant holes in the domestic supply chain that have been filled by imports. We hope to see these holes quickly filled by º£½ÇÊÓƵ-made steel."
A representative for the steelworkers' union Community expressed concern, saying: "These are worrying developments, and we are seeking clarification on what this means for our members and their livelihoods. Jobs must be protected, and these sites – which are vital strategic assets – need to resume production as soon as possible."
Shadow Business Secretary Andrew Griffith attributed the situation to "Labour's ruinously high energy costs driven by net zero dogma".
