It might sound like familiar territory following the recent British Government's takeover of British Steel, but yes, we're back in the same territory following the announcement that the UK's third largest steelworks is now under Government control and that the future for its 1,500 workers is currently uncertain.

A report by BBC news claims that insolvency courts in the UK have granted a compulsory winding up order sought by creditors owed hundreds of millions of pounds by Speciality Steels UK (SSUK) – part of Liberty Steel's metals empire owned by Sanjeev Gupta.

According to the BBC report, the business is now in the hands of the official receiver, and the Government has agreed to cover ongoing wages and costs, linked to plants in Rotherham and Sheffield, until a buyer is found.

Jeffrey Kabel, Liberty Steel's chief transformation officer is said to be "really disappointed" claiming that Liberty is 'by far' the best company to run the troubled business.

The BBC story claims that 'lawyers for Sanjeev Gupta [the man behind Liberty Steel] had applied for a four-week adjournment for time to place the company in a "pre-pack administration", which allows an insolvent business to sell its assets to a bidder."

In an ideal world for Gupta, funding from investment company BlackRock and Fidera, would have been a good outcome. Winding up the company, it has been argued by lawyers, could place the business in 'free fall' and incur significant disruption, cost and risk to a nationally important steel company and its 1,500 workers.

However, the BBC report claims that the judge found the company was 'hopelessly insolvent'. With only £600,000 in the bank and a monthly wage bill of £3.7m and a parent group with 15 entities already in insolvency proceedings across nine jurisdictions, a compulsory winding up order seemed like the best way to go.

The British Government hopes (in fact, desires) to return 'some or all' of the sites to steelmaking. It has been argued that 'an orderly compulsory liquidation' may be one way of ensuring this happens.

On an historical note, the Liberty Steel Group's finances 'were upended' when the company's chief lender Greensill Capital collapsed owing billions to investors, including UBS and Citibank, who are part of the current creditor group that applied for a winding up petition.

Source: BBC News.