Whitehall on Alert as Gupta’s UK Steel Business Teeters on the Brink

Fears grow over potential collapse of Liberty Steel, risking over 1,400 jobs and major disruption to the UK’s steel industry

Government Braces for Collapse of Liberty Steel UK

Whitehall officials have begun urgent preparations for the possible collapse of Liberty Speciality Steels UK (SSUK), the steel arm of Sanjeev Gupta’s empire, as the company faces mounting financial pressures.

A winding-up petition brought by creditors is due to be heard this week. If approved, it could lead to the compulsory liquidation of SSUK within days, endangering more than 1,400 skilled jobs across plants in Sheffield and Rotherham.

Gupta Seeks Pre-Pack Administration to Avoid Collapse

Sanjeev Gupta is reportedly pursuing a connected pre-pack administration deal. This would involve selling off SSUK's assets—potentially to entities connected to Gupta himself—while shedding hundreds of millions of pounds in liabilities, including tax debts.

• Begbies Traynor, the insolvency specialists, are advising on the potential deal
• This approach may trigger opposition from key creditors, including HM Revenue & Customs and UBS
• Liberty Steel is the UK’s third-largest steelmaker, making this an issue of national significance

Why This Matters for UK Industry and the Economy

Liberty’s steel operations are a critical part of UK manufacturing, supplying highly engineered products to:

• Aerospace
• Automotive
• Oil and gas sectors

SSUK claims to have invested nearly £200 million in the past five years, but spiralling energy costs and competition from cheap steel imports have created a crisis across the entire UK steel industry.

The potential collapse of SSUK could:

• Severely impact regional economies in Yorkshire and Lancashire
• Cause significant job losses in steel-dependent communities
• Weaken UK supply chains in strategic sectors

Government’s Role Under Scrutiny

While Business Secretary Jonathan Reynolds has stepped in to support British Steel in recent months, the government has so far declined to intervene in Liberty Steel’s affairs.

• The Serious Fraud Office continues to investigate Gupta’s GFG Alliance
• Previous attempts by Gupta to secure pandemic-era government support were rejected
• Reynolds has not ruled out intervention but no support is currently imminent

A government spokesperson said:

“We continue to closely monitor developments around Liberty Steel, including any public hearings, which are a matter for the company.”

Other Gupta-Owned Firms Also in Trouble

The warning signs extend beyond SSUK. Other parts of Gupta’s empire have been showing severe financial strain:

• Liberty Pipes is also facing a winding-up petition
• Liberty Commodities may soon be placed into administration
• Gupta had reportedly hoped to use similar legislation that allowed the government to take control of British Steel, but sources say this has been firmly rejected

Conclusion: A Crucial Week for Britain’s Steel Industry

The fate of Liberty Steel UK will be closely watched not just by its workforce, but by the entire British manufacturing sector. With electric arc furnaces set to play a key role in the country’s green transition, the loss of one of the nation’s last major producers could have far-reaching consequences.

Whether the government steps in or not, one thing is certain: the outcome of this crisis will shape the future of UK steel and its place in the global industrial economy.

If the steel giant collapses, it will not just be a business failure—it will be a blow to the communities and industries that rely on it.

Sources: (BBCmoney.co.uk, SKYmoney.com)