A Tyneside business steel business which was placed into administration by its US owners collapsed owing £16.9m, fresh documents show.
Union Electric Steel in Gateshead – formerly known as Davy Roll – has been producing rolled steel for more than 180 years, but earlier this year its US bosses Ampco announced plans to wind down the North East operations, citing rising costs, overseas competition and mounting losses. An original closure date for Spring 2026 was set, and union reps struck a deal with company bosses for redundancy packages for its 160 employees, many of whom have worked at the factory for decades.
However, the plant’s US owners then accelerated its closure by putting the Tyneside company into administration last month - a move which wiped out the previous redundancy agreement. Now the joint administrators – Shaun Hudson, Allan Kelly and Anthony Wright of FRP Advisory’s Newcastle office – have published their report, highlighting an estimated total deficiency of £16.9m, while also showing how some creditors, including trade creditors and staff, could get just 4.8% of what they are owed.
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Around 65 employees were made redundant following the administrators’ appointment in October, but administrators are continuing to trade the business, retaining 91 staff to complete works in progress. They estimate the projects will bring in around £5.22m before costs - funds which will be distributed to creditors. Exactly how much creditors will get, however has yet to be decided.
The document details the chain of events leading to the firm’s collapse – and also says the work will continue until December, effectively bringing the factory to a close within days, after more than a century of production.
The report says: “The wind down plan considered by the company and group forecast additional funding required from group to cover losses of circa £6m in the wind down period. Additionally, the company’s directors had been advised to seek an unlimited indemnity from group to support the plan.
“In July 2025, the USA’s tariffs on importing steel began to have an impact upon UES Corp and its related companies. Against this uncertain economic backdrop and additional working capital required to absorb the impact of the tariffs, the group was concerned that it would not be able to commit the funding required by the company.”
After enlisting FRP Advisory to mull various options, the owners then opted to place the firm in administration. A statement of affairs has yet to be filed by directors, but the administrators have made estimates using the information they have. A total of 15 pages of creditors are listed, which include companies across the North East, with unsecured creditors owed an estimated £16.545m.
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That figure includes £2.47m owed to trade creditors, £7.21m to the defined benefit pension scheme and the £5.667m owed to employees in relation to agreements set ahead of the administration. The original redundancy package for employees was set to include statutory redundancy pay, plus a minimum £4,000 payment for permanent employees regardless of length of service, plus a payment of 85% of a week’s wage for each year of service.
As it stands, staff will have to apply to the Government for statutory redundancy which is capped at £719 a week, with a maximum allowance of £21,570. Around £84,000 is set to be paid in full to the staff as secured creditors for “arrears of pay, unpaid pension contributions and holiday pay as calculated in accordance with legislation”.
But, the report, says: ““The unsecured claim of the employees and RPO represents arrears of wages over £800 per employee, redundancy pay, pay in lieu of notice and a contractual ex gratia payment agreed between the company and employees (via the union representatives) as part of the planning for the wind down exercise initiated prior to the Administrators’ appointment.”
While administrators estimate that there will be sufficient funds available to make a distribution to unsecured creditors, they add: “Based on the current estimate of the level of creditor claims this distribution is estimated at 4.8p in the £.
The secured creditor PNC Bank is estimated to be owed around £11m - and administrators estimate that PNC will suffer a shortfall. HMRC, meanwhile, is owed £140,877. Administrators add that they have enlisted Avison Young to deal with the property, and Gordon Brothers to market the factory assets.