Workers fear for jobs as British Steel goes into liquidation
British Steel has gone into liquidation, threatening thousands of job losses, amid revelations that it would have run out of cash by the end of the week.
The company, owned by Greybull Capital, will continue to trade while the Government’s Official Receiver searches for a buyer to rescue plants, including the giant steelworks at Scunthorpe.
At a High Court hearing in London, Mr Justice Snowden said cash-flow forecasts produced by the company and its advisers “indicate that the company will run out of cash by the end of the week, with a shortage of £14.8 million, increasing thereafter to nearly £95 million by early August 2019″.
Greybull had been seeking financial support from the Government, saying it faced a number of Brexit-related issues, but talks failed to reach an agreement.
A winding-up order was sought “in relation to the company on the grounds that it is unable to pay its debts”.
The judge said that on the basis of the evidence he had seen, he was “entirely satisfied that the company is, or will in the immediate future be, unable to pay its debts as they fall due”.
He said: “The evidence is that the debts of the company as at 31 March 2019 total £880 million, which includes £151 million due to the asset-based lenders and £206 million due to the company’s parent companies.”
Business Secretary Greg Clark said the Government had worked “tirelessly” to explore all potential options, and was willing to consider making a loan, but there was no reasonable prospect that it would have been repaid.
He said: “This will be a deeply worrying time for the thousands of dedicated British Steel workers, those in the supply chain and local communities.
“In the days and weeks ahead, I will be working with the Official Receiver and a British Steel support group of management, trade unions, companies in the supply chain and local communities, to pursue remorselessly every possible step to secure the future of the valuable operations in sites at Scunthorpe, Skinningrove and on Teesside.”
A statement by the Official Receiver said staff have been paid and will continue to be employed, adding: “The immediate priority following my appointment as liquidator of British Steel is to continue safe operation of the site.
“I appreciate that this a difficult time for the company’s employees and I want to thank them for their ongoing co-operation.
“The company in liquidation is continuing to trade and supply its customers while I consider options for the business.”
Roy Rickhuss, general secretary of the Community trade union, said: “This news will heap more worries on workers and everyone connected with British Steel, but it will also end the uncertainty under Greybull’s ownership and must be seized as an opportunity to look for an alternative future.”
Unite assistant general secretary Steve Turner said: “I have received personal assurances that the Government will underwrite the receivership process, which means that people’s wages and suppliers will continue to be paid and that the business can continue to operate as normal.
“While it does not represent the move into public ownership that Unite was seeking, it does place British Steel on a secure footing until a buyer for this world class business can be found.”
Shadow business secretary Rebecca Long-Bailey said: “This is absolutely devastating news for the thousands of workers, their families and the communities in Scunthorpe and Teesside and those throughout the supply chain.
“The Tories’ legacy will once again be industrial decline whilst they endlessly squabble over the European Union.”
Hannah Essex, of the British Chambers of Commerce, said: “Many Chamber businesses will be concerned about the potential impact of British Steel entering insolvency, particularly those in their supply chain who will be directly and deeply affected.”
A spokesman for Greybull Capital said: “Having rescued the business from closure over three years ago, we have worked hard to bring this important company back on its feet.
“The turnaround of British Steel was always going to be a challenge, and yet the business overcame many difficulties, and until recently looked set for renewed prosperity.
“The workforce, the trade unions and the management team have worked closely together in their determination to strengthen the business; however, the additional blows dealt by Brexit-related issues have proven insurmountable.”
For the town of Scunthorpe, the impact of losing the plant would be “immeasurable”, according to one former steelworker.
Charlotte Childs, who is now a regional official for the GMB union, said the news was “absolutely devastating”.
She said: “I don’t think it can be understated, the impact that this is going to have on the town and community, if we don’t find a solution to this imminently.”
A three-year-old tweet came back to haunt Nigel Farage, as opponents reminded him of his prediction that a Remain referendum win would kill off Britain’s steel industry.
In the April 2016 tweet, the Brexit Party leader wrote: “If we vote to Remain on June 23rd it is the end of the steel industry in this country. Simple as that. We must Leave EU.”