Liberty Steel Group, part of the GFG Alliance group of companies, said Feb. 11 it remains in dialogue with creditors to ensure a sustainable future for its UK businesses, after press reports suggested UK tax authority HMRC could take it to court or wind some operations up over unpaid tax, which might result in works closures and unemployment. HMRC said that it aimed generally to be “supportive.”
“Our priority has been to protect thousands of jobs in the UK. We are committed to repaying all our creditors and continue to work with all stakeholders around the UK to create a sustainable future for our businesses following the collapse of Greensill Capital,” a Liberty Steel spokesperson said. “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 destabilizing 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.”
Liberty Steel started to experience cash flow difficulties following the collapse of GFG’s main financier, Greensill Capital, in March 2021. This also led to raw materials supply interruptions at some plants as some suppliers reportedly pulled out of supply arrangements due to fears of not being paid, hitting Liberty’s output levels. While a UK market upturn from mid-2021 allowed Liberty Steel UK to restart operations by October at its “greensteel” Rotherham electric arc furnace and its speciality steel division in Stocksbridge – this latter having been closed since spring 2021 – high electricity costs have forced Liberty to operate the EAF only at night since that time.
“Against a very challenging backdrop in the UK with record high energy prices and imports we have provided tens of millions in funding to keep our people in employment and maintain operations to serve customers and strategic supply chains while we complete our refinancing”, the Liberty spokesperson said.
The spokesperson did not immediately confirm Liberty Steel’s current production levels in the UK.
According to reports in the Financial Times and The Guardian newspapers, HMRC has issued petitions to wind up operations at Liberty’s Speciality Steel UK, Liberty Pipes (Hartlepool), Liberty Performance Steels and Liberty Merchant Bar operations which reportedly owe a total of GBP26.4 million ($35.83 million) to the tax authority.
Usually informed sources said they could not confirm that the HMRC had yet filed any court case against the steelmaker.
HMRC, BEIS indicate ready to be supportive
An HMRC spokesperson said in an email to S&P Global Platts: “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.” The authority added it could not comment on identifiable taxpayers due to the law around taxpayer confidentiality.
A government spokesperson from the Department for Business, Energy and Industrial Strategy said in an email that: “The Government is closely monitoring developments around Liberty Steel and continues to engage closely with the company. As always, we stand ready to support their dedicated employees and their families affected by any developments.
“We have provided extensive support to the steel sector as a whole to help with the costs of electricity and are working with them to support their low carbon transition.”
The BEIS spokesperson noted that HMRC’s decisions regarding issuing of winding-up petitions are taken independently, and that it is “first and foremost the responsibility of the company to manage commercial decisions for the future of the organization.”
— Diana Kinch
