As many as 3,000 workers in five of Sanjeev Gupta’s Liberty Steel plants across England face losing their jobs after HM Revenue and Customs filed petitions to wind up their operating companies over unpaid taxes.
Gupta’s GFG Alliance metals empire could be at risk if four Liberty companies fail to reach an agreement with HMRC and other creditors, after a year of struggles after the collapse of Greensill Capital, its main lender.
Unions condemned the move as a devastating blow, saying the plants must be kept open because of Liberty’s strategic importance to the UK economy.
The four companies under threat are:
Speciality Steel UK, which employs close to 2,000 people at Rotherham and Stocksbridge in South Yorkshire.
Liberty Merchant Bar at Scunthorpe in North Lincolnshire.
Liberty Performance Steels Ltd at West Bromwich in the West Midlands.
Liberty Pipes at Hartlepool in County Durham.
The accounting regulator also announced separately on Thursday that it had opened an investigation into the audit of Liberty Commodities Ltd, another part of the sprawling network of GFG companies.
The audit, covering the year ending 31 March 2020, was carried out by HW Fisher, a London accountancy firm. GFG declined to comment on the investigation. HW Fisher was approached for comment.
Companies or other creditors can apply to the high court to wind up a company if it cannot pay its debt. If a winding up petition is successful the business’s assets can be sold and the proceeds paid to creditors.
The petitions and investigation added to the difficulties facing Gupta as he seeks to keep his businesses afloat while engaging in drawn-out refinancing talks to replace the money borrowed from Greensill, founded by Australian entrepreneur Lex Greensill. Greensill, who later hired former UK prime minister David Cameron as an adviser, had bankrolled the expansion of Gupta’s empire.
The UK’s Serious Fraud Office is also investigating suspected fraud, fraudulent trading and money laundering related to GFG’s financing and its links to Greensill. GFG and Gupta have denied any wrongdoing and have promised to cooperate with the investigation.
The Rotherham and Stocksbridge sites are particularly important parts of GFG’s UK operations. They make tougher, anti-corrosive steel that is required by the aerospace industry and some other applications including oil and gas exploration.
The plants had suffered from stop-start production amid plummeting demand caused by pandemic restrictions on flying, but in recent months demand is thought to have picked up.
Nevertheless, the pressures on Gupta’s companies have been compounded by energy prices, which have surged at an unprecedented rate in recent months. Energy costs have meant the plants are operating at less-than-full capacity despite global high prices for steel, according to a source briefed on the operations.
A Liberty Steel spokesperson highlighted “a very challenging backdrop in the UK with record high energy prices”.
The UK’s main steel unions, Community, GMB and Unite, issued a joint statement on Thursday decrying HMRC’s actions, arguing that they risked pushing the plants under.
The unions said: “This action by HMRC threatens thousands of jobs and is a devastating blow to our members and their families. Liberty Steel is a strategically important business, crucial to delivering net zero, and under no circumstances can our plants be allowed to close.”
The Liberty Steel spokesperson also criticised HMRC, saying: “We are in continuous dialogue with all our creditors including HMRC to find an amicable solution that’s in the best interest of all stakeholders.
“Short-term actions that risk destabilising these efforts are not in anyone’s interest, and undermine creditor recovery at a critical stage in our debt restructuring efforts that seek to secure the future of our businesses.”
The company’s “priority has been to protect thousands of jobs in the UK” but it is “committed to repaying all our creditors”, the spokesperson said.
HMRC declined to comment on the criticisms. A spokesperson said: “We take a supportive approach to dealing with customers who have tax debts, working with them to find the best possible solution based on their financial circumstances.”
