Workers at the UK’s third-largest steelworks in South Yorkshire have been assured they will receive their pay for August as well as unpaid pension contributions, after a government-appointed special manager took over the collapsed company.
Liberty Steel’s main British business, Speciality Steel UK (SSUK), collapsed into administration on Thursday afternoon after a high court judge ruled that it was insolvent and that its owner, the metals tycoon Sanjeev Gupta, had no prospects of repaying debts of several hundred million pounds.
The judge approved an application by the government’s official receiver, a representative tasked with winding up insolvent companies, to appoint special managers from the advisory company Teneo. A Teneo senior managing director was present in court on Thursday, and made contact with Liberty Steel executives immediately after the hearing.
Concerned union leaders representing SSUK’s 1,450 workers met the special managers last night, seeking assurances particularly on pay and pensions, as well as when operations could restart at sites including Rotherham and Stocksbridge in South Yorkshire, after a year without work.
Roy Rickhuss, the general secretary of Community, the biggest steelworking union, said that he had “received firm assurances” on pay and pensions.
The court heard on Thursday that SSUK had only £650,000 left in its bank account, with the August payroll of £3.6m due on Friday. Gupta’s counsel had argued that he was ready to cover the payments via another company, Liberty Capital UK, although the judge, Mr Justice Mellor, said Gupta’s assurances that he could pay “are at best questionable”.
The special managers have committed that workers will receive their August pay packets before the bank holiday weekend. They also said that they will fill in unpaid employer pension contributions for the past year. That will remove a major source of concern for workers, who had feared losing national insurance protections next month if the company were to close.
It remains unclear when the plants will restart production, although a person briefed on the talks said that the special managers had given positive signals that it could happen soon. Restarting production and trying to generate cash after four years in which it lost £340m will be crucial to limiting the costs of the administration, which will be borne temporarily by the government.
Rickhuss said: “This is an extremely worrying time for our members at Liberty Steel, but the government’s intervention must mark a turning point to deliver certainty for these strategically important businesses.
“Crucially, jobs must be protected throughout any restructuring and transition to new ownership. Steelworkers at Liberty Steel are highly skilled and hugely experienced; they are quite frankly irreplaceable and will be critical to delivering future success for the businesses.”
Sharon Graham, the general secretary of the Unite union, said the government “must provide long-term guarantees that it will protect jobs” and be ready to run the business itself if no buyer can be found.
after newsletter promotion
The government this week told the court via a letter that several potential buyers had already made contact to express interest in buying SSUK from administration.
The ruling removes control of the business from Gupta’s control, although one of his executives, Jeffrey Kabel, said that GFG would try to buy the business back out of insolvency.
However, Gupta still retains several other UK businesses, including a pipes business in Hartlepool that HM Revenue and Customs had sought to wind up, an aluminium smelter and a steel plate mill in Scotland, and a steel coil plant in Newport, south Wales.
Kabel insisted that those businesses would continue to operate, and claimed that production was ready to restart at the Scottish plate mill in Motherwell, which has also not produced anything for a year.
