Speciality Steel at Stocksbridge, a division of Liberty Steel, was issued a winding up petition last month which could’ve seen it face closure if the firm was deemed to be insolvent in a court hearing - which was scheduled for this month.
But progress has been made, according to the firm - one of the local area’s biggest employers - to strike a deal with its creditors, which include HMRC.
John Healey, MP for Wentworth and Dearne, said: “I urged the Businesses Secretary last month to get HMRC back around the table with Liberty Steel to reach agreement on repayments and avoid the risk of the company being forced out of business by the Government.
“I am pleased to see that they’ve done this and HMRC has withdrawn its winding-up petition. This is good news for our Rotherham steel plant and a relief for workers who were unsettled about the company’s future.
“The fact that HMRC has agreed a repayments plan should also be seen as showing some government confidence in Liberty’s long-term refinancing prospects.
“What we need now is the new investment promised by Liberty’s bosses and the long-pledged government action on energy costs for all UK steelmakers.”
Gupta Family Group (GFG) Alliance, Liberty Steel’s parent company, has been under investigation by the Serious Fraud Office since May for its financial arrangements.
In May, GFG announced plans to sell its Stocksbridge site after main financial backer Greensill Capital collapsed into administration two months earlier.
The aerospace industry is a major customer of the plant and the distress in that industry, a knock-on effect of the Covid-19 pandemic, saw demand for its steel plummet.
GFG owner Sanjeev Gupta had a bail-out request for £170m rejected by the government last year due to the company’s accounting procedures - which a meeting of the Business, Energy and Industrial Strategy (BEIS) Committee in July found involved ‘risky’ loans based on unconfirmed future transactions.
But due to refinancing debts at its Australian steel and mining sites, a lifeline came late last year when GFG Alliance freed up £50m cash to be put into its UK plants at Stocksbridge and Rotherham, which employ nearly 1,000 workers.
Charlotte Childs, GMB’s national officer, said: “Retracting these winding up orders will be a massive comfort to our members at Liberty Steel.
“Thousands of jobs will be saved in the short term, but we are far from out of the woods.
“It is right that shareholder investment has been committed to secure the future of jobs and plants at Liberty Steel.
“GMB will now be seeking to continue constructive dialogue with GFG Alliance to ensure the impact of the financial restructuring and transformation package is felt in the right places.”