Steel tycoon Gupta heads for court to restructure UK arm

11 November 2024, 09:58 | Updated: 11 November 2024, 10:39

The steel tycoon Sanjeev Gupta is to seek court approval for a restructuring of the bulk of its remaining operations in Britain.

Sky News has learnt that Liberty Steel, Mr Gupta's privately owned company, is on Monday launching a restructuring plan for its Speciality Steel division in the UK (SSUK) that would significantly reduce its debts.

Begbies Traynor, the insolvency practitioner, has been appointed to oversee the restructuring plan, which will be implemented under Part 26A of the 2006 Companies Act.

People close to the process said there would be no impact on the 1,500 employees of the Speciality Steel business in the UK.

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Liberty Steel creditors would be compromised under the plan, which will require the approval of 75% of them in order to be approved by the court.

One source said the move was likely to prove controversial following a series of restructuring and cost-cutting measures from Mr Gupta's empire in recent years.

In 2021, he sought £170m from the government in emergency assistance, but the request was rejected.

In a statement issued in response to an enquiry from Sky News, Jeffrey Kabel, Liberty Steel group chief transformation officer, said: "After making significant progress to stabilise the business and refocus it on high value specialist products, we're now addressing the debt position of the company to create a stronger speciality business going forward.

"Our plan, which is backed by customers, is the best route forward for all stakeholders and we're confident in winning the support of our creditors for the essential actions required to complete SSUK's recovery."

A person close to the company said the delivery of the restructuring plan would enable the company to attract new financing and expand into faster-growing areas of the industry.

The SSUK division operates across sites including at Rotherham in south Yorkshire and Bolton in Lancashire.

It makes highly engineered steel products for use in sectors such as aerospace, automotive and oil and gas.

Mr Gupta's efforts to turn around the business are said by allies to have been hampered by its deep relationship with Greensill Capital, the controversial financial group which collapsed in 2021.

In a separate statement provided to Sky News, Alasdair McDiarmid, assistant general secretary of the trade union Community, said: "We acknowledge Liberty's plan to reduce debts and welcome the company's commitment there will be no impact on employees.

"Liberty's Speciality Steel businesses are strategically important for our country and their long-term future must be secured.

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"As well as supporting thousands of highly skilled well-paid jobs, they produce world leading green steels for Britain's defence, aerospace and energy industries.

"All stakeholders must play their part to protect jobs and safeguard these priceless national assets."

The restructuring of SSUK comes as Chinese-owned British Steel continues to discuss a potential aid package with the government.

Whitehall sources described a suggestion that the company could receive as much as £2bn from a government fund as "completely inaccurate".

Tata Steel, the industry's biggest player, has agreed a deal to receive £500m from the taxpayer in order to electrify steel production at its Port Talbot plant.

As part of that deal, though, thousands of steelworkers are being made redundant.