Whitehall on alert for collapse of Gupta's steel empire

The metals tycoon Sanjeev Gupta is this play plotting a arguable woody that would support him successful power of his remaining UK alloy operations and avert their illness into compulsory liquidation – a determination that would enactment adjacent to 1,500 jobs astatine risk.

Sky News has learnt that Mr Gupta is successful talks astir a alleged connected pre-pack medication of Liberty Steel's Speciality Steel UK (SSUK) arm, which would impact Mr Gupta emerging arsenic the proprietor of the assets aft shedding hundreds of millions of pounds of taxation and different liabilities to creditors.

Begbies Traynor, the accountancy firm, is understood to beryllium moving connected efforts to advancement the pre-pack deal.

This weekend, Whitehall sources said that authorities officials had stepped up readying for the illness of SSUK if an already-deferred winding-up petition scheduled to beryllium heard adjacent Wednesday is approved.

If that were to happen, SSUK would beryllium apt to participate compulsory liquidation wrong days, with a peculiar manager appointed by the Official Receiver to tally the operations.

Mr Gupta's UK concern operates alloy plants astatine Sheffield and Rotherham successful South Yorkshire, with a combined workforce of much than 1,400 people.

Sources adjacent to Mr Gupta could yet unafraid a further adjournment of the winding-up petition to bargain him further breathing abstraction from creditors.

A connected pre-pack risks stiff absorption from Liberty Steel's creditors, which see HM Revenue and Customs.

UBS, the concern slope which rescued Credit Suisse, a large backer of the collapsed concern steadfast Greensill Capital - which itself had a multibillion dollar vulnerability to Liberty Steel's parent, GFG Alliance - is besides a creditor of the company.

Grant Thornton, the accountancy steadfast handling Greensill's administration, is besides watching the ineligible proceedings with interest.

On Saturday, a Liberty Steel spokesperson said: "Discussions are ongoing to finalise options for SSUK.

"We stay committed to identifying a solution that preserves electrical arc furnace steelmaking successful the UK-a captious nationalist capableness supporting strategical proviso chains.

"We proceed to enactment towards an result that champion serves the interests of creditors, employees, and the broader community."

Last month, The Guardian reported that Jonathan Reynolds, the concern secretary, was monitoring events astatine Liberty Steel's SSUK arm, and had not ruled retired stepping successful to supply enactment to the company.

Such a determination is inactive thought to beryllium an option, though it is not said to beryllium imminent.

The Department for Business and Trade has been contacted for comment.

It has antecedently said: "We proceed to intimately show developments astir Liberty Steel, including immoderate nationalist hearings, which are a substance for the company.

"It is for Liberty to negociate commercialized decisions connected the aboriginal of its companies, and we anticipation it succeeds with its plans to proceed connected a sustainable basis."

Wednesday's winding-up petition was filed by Harsco Metals Group, a supplier of materials and labour to SSUK, and is said to beryllium supported by different commercialized creditors.

Mr Reynolds has already orchestrated the rescue of British Steel, the Scunthorpe-based steelmaker, aft failing to scope a authorities assistance woody with Jingye Group, the company's Chinese owner.

Jingye had been preparing to permanently adjacent Scunthorpe's remaining blast furnaces, prompting Mr Reynolds to measurement successful and prehend power of the institution successful April.

The authorities has yet to marque a determination to formally nationalise British Steel, though that is anticipated successful the autumn.

Tata Steel, the proprietor of Britain's biggest steelworks astatine Port Talbot, has agreed a £500m authorities assistance to physique an electrical arc furnace susceptible of manufacturing greener steel.

Other parts of Mr Gupta's empire person been showing signs of fiscal accent for years.

The Financial Times reported successful May that helium was preparing to telephone successful administrators to oversee the insolvency of Liberty Commodities.

Separately, HMRC filed a winding-up petition against Liberty Pipes, different subsidiary, earlier this month, The Guardian reported.

Mr Gupta is said to person explored whether helium could transportation the authorities to measurement successful and enactment SSUK utilizing the authorities enacted to instrumentality power of British Steel's operations.

Whitehall insiders told Sky News successful May that Mr Gupta's overtures had been rebuffed.

He had antecedently sought authorities assistance during the pandemic but that plea was besides rejected by ministers.

SSUK, which besides operates from a tract successful Bolton, Lancashire, makes highly engineered alloy products for usage successful sectors specified arsenic aerospace, automotive and lipid and gas.

The institution said earlier this twelvemonth that it had invested astir £200m successful the past 5 years into the UK alloy industry, but had faced "significant challenges owed to soaring vigor costs and an over-reliance connected inexpensive imports, negatively impacting the show of each UK alloy companies".