The Sanjeev Gupta metal magnate is this weekend, plots a controversial agreement to save its remaining British steel operations and avoid their collapse in compulsory liquidation – a decision that would put nearly 1,500 jobs in danger.
Sky News has learned that Mr. Gupta is in talks on a pre -pack administration connected from the Liberty Steel Uk arm (SSUK), which would involve assets sold – potentially to the parties linked to him – after losing hundreds of millions of pounds of taxes and other responsibilities to creditors.
Begbies Traynor, the accounting firm, is understood that efforts to advance the pre-pack agreement.
This weekend, Whitehall Sources said that government officials had intensified the SSUK collapse planning if a liquidation petition already scheduled for next Wednesday is approved.
If this were to happen, SSUK would be likely to enter a compulsory liquidation in a few days, with a special manager appointed by the official recipient to perform operations.
Mr. Gupta’s British company operates steel plants in Sheffield and Rotherham in southern Yorkshire, with a combined workforce of more than 1,400 people.
SSUK is the third British steel producer.
Sources close to Mr. Gupta could still ensure a new adjournment of the liquidation petition to buy him an additional respiratory space from creditors.
In May, an hearing was adjourned after lawyers acting for SSUK said that talks had taken place with “a third -party buyer”.
Their identity has not been publicly disclosed and it has not been clear in recent weeks if such discussions were continuing.
A connected pre-pack risks strong opposition from Liberty Steel creditors, who include HM income and customs.
UBS, the investment bank which saved Credit Suisse, a major of the collapsed financial company Greensill Capital – which itself had a several billion dollars exhibition at the parent of Liberty Steel, GFG Alliance – is also a creditor of the company.
Grant Thornton, the accounting firm who takes care of the administration of Greensill, also monitors the legal proceedings with interest.
The Serious Fraud Office launched an investigation into GFG – which means Gupta Family Group – in 2022.
On Saturday, a spokesman for Liberty Steel said: “Discussions are underway to finalize the options for SSUK.
“We remain determined to identify a solution which preserves the fute electric arc in steel with the critical national capacity of the United Kingdom to support the strategic supply chains.
“We continue to work towards a result which best serves the interests of creditors, employees and the wider community.”
Last month, the Guardian said that Jonathan Reynolds, the business secretary, was monitoring the events of the Liberty Steel SSUK arm and had not excluded to intervene to provide support to the company.
Such a decision is still considered an option, although it is not said to be imminent.
The business and trade department has been contacted for comments.
He previously said: “We continue to closely monitor the developments around Liberty Steel, including all public hearings, which are a question for the company.
“It is the freedom to manage commercial decisions on the future of its societies, and we hope that it will succeed with its plans to continue on the sustainable level.”
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The liquidation petition on Wednesday was deposited by Harsco Metals Group, a supplier of materials and labor in SSUK, and would be supported by other commercial creditors.
Mr. Reynolds has already orchestrated the rescue of British Steel, the SI acided by Scunthorpe, after having failed to conclude a government assistance agreement with Jingye Group, Chinese owner of the company.
Jingye had prepared to permanently close the remaining high stoves of Scunthorpe, which prompted Mr. Reynolds to intervene and take control of the company in April.
The government has not yet made the decision to officially nationalize British steel, although this is planned in the fall.
Tata Steel, the owner of the largest steel in Great Britain in Port Talbot, agreed with a government subsidy of 500 million pounds sterling to build an electric arc furnace capable of making green steel.
Other parts of Mr. Gupta’s Empire have been showing signs of financial stress for years.
The Financial Times reported in May that he was preparing to call the administrators to supervise the insolvency of freedoms of freedom.
In addition, HMRC filed a petition for liquidation against Liberty Pipes, another subsidiary, earlier this month, reported the Guardian.
Mr. Gupta would have explored if he could persuade the government to intervene and support SSUK using the promulgated legislation to take control of British Steel operations.
Whitehall’s initiates told Sky News in May that Mr. Gupta’s openings had been pushed back.
He had previously asked for the government’s help during the pandemic, but this plea was also rejected by the ministers.
SSUK, which also operates from a Bolton site in Lancashire, manufactures highly designed steel products to use in sectors such as aerospace, automotive and oil and gas.
The company said earlier this year that it had invested nearly 200 million pounds Sterling in the past five years in the British steel industry, but had been confronted with “significant challenges due to the outbreak of energy costs and excessive dependence on cheap imports, which has a negative impact on the performance of all British steel companies”.