British Steel, the second largest steel maker in the country, collapsed after talks with the government failed to secure a bailout, threatening 5,000 workers and another 20,000 jobs depend on its supply chain. The company had asked for a package of support to tackle issues related to Britain's pending departure from the European Union. The High Court ordered the company into compulsory liquidation, according to the government's Insolvency Service.
"The immediate priority following my appointment as liquidator of British Steel is to continue safe operation of the site," said David Chapman, the official receiver, referring to the Scunthorpe plant in northeast England. The company will continue to trade and supply its customers while Chapman considers options for the business. A team from financial firm EY will work with the receiver and all parties to "secure a solution."
"To this end they have commenced a sale process to identify a purchaser for the businesses," EY said in a statement. The government said it had done all it could for the company, including providing a 120 million pound bridging facility to help meet emission trading compliance costs. Going further would not be lawful as it could be considered illegal state aid, Business Secretary Greg Clark said. "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," he said.
Unions had called for the government to nationalize the business, but the government demurred. The opposition Labour Party's deputy leader, Tom Watson described the news as "devastating." "It is testament to the government's industrial policy vacuum, and the farce of its failed Brexit," he said in a tweet.
The director-general of UK Steel, the trade association of the industry, Gareth Stace said, “The crisis underscores the anxieties of British manufacturers, who have been demanding clarity around plans for Britain's departure from the EU. Longstanding issues such as noncompetitive electricity prices also continue to deter investment in UK manufacturing.” "Many of our challenges are far from unique to steel - the whole manufacturing sector is crying out for certainty over Brexit," Stace said. "Unable to decipher the trading relationship the UK will have with its biggest market in just five months' time, planning and decision making has become nightmarish in its complexity."
Greybull Capital, which bought British Steel in 2016 for a nominal sum, said turning around the company was always going to be a challenge. It praised the trade union and management team, but said Brexit-related issues proved to be insurmountable. "We are grateful to all those who supported British Steel on the attempted journey to resurrect this vital part of British industry," it said in a statement.
