British Steel employs 5,000 people, including at its sprawling steelworks in Scunthorpe, northern England (Lindsey Parnaby)

London (AFP) – British Steel collapsed on Wednesday after the government said last-ditch talks with its owners failed to secure a full financial rescue.

The High Court in London ordered British Steel Limited into compulsory liquidation, a statement said.

“British Steel Limited was wound-up in the High Court” on Wednesday, meaning its assets would be sold to help pay debts.

“The government has worked tirelessly with British Steel, its owner Greybull Capital, and lenders to explore all potential options to secure a solution for British Steel,” said Business Secretary Greg Clark.

“We have shown our willingness to act, having already provided the company” recently with funds.

Steve Turner, assistant general secretary of the Unite union, said that while the government had not taken the group into state ownership, it had pledged to keep paying staff wages in the hope that a buyer could still be found.

“I have spoken to business secretary Greg Clark seeking assurances about British Steel as we fight to secure its future and the livelihoods of tens of thousands of people,” said Turner, representing Britain’s biggest union.

“I have received personal assurances that the government will underwrite the receivership process, which means that people’s wages and suppliers will continue to be paid and that the business can continue to operate as normal,” he added in a statement.

Tim Roache, general secretary of the GMB union, described the collapse of Britain’s second-biggest steelmaker as “devastating news for the thousands of workers” in the UK. 

Some 5,000 people are employed by British Steel and an estimated 20,000 more have links to the firm’s supply chain.

Greybull has blamed Brexit strains for its financial collapse, while the steel sector faces other uncertainties.

– Steel industry clouds –

There are clouds also over the future of Tata Steel’s main European operations based in the UK after German industrial conglomerate Thyssenkrupp recently scrapped merger plans with the Indian giant.

A deal was seen as positive for Tata’s Port Talbot plant in Wales that employs more than 4,000 staff.

Following the merger collapse, Thyssenkrupp said it would slash 6,000 jobs worldwide in a structural shakeup.

Greybull Capital created British Steel, a maker of long steel products, in 2016 after snapping up assets from Tata Steel.

Long steel products include plates, rails for railways, sections used in construction, and wire rod. The latter can be used as steel rope for infrastructure like suspension bridges or filaments for car tyres to give rigidity.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.