British Steel – Brexit’s first heavyweight casualty
On 22 May 2019 the High Court ordered British Steel Limited into compulsory liquidation. The Official Receiver was appointed as liquidator and EY will assist as Special Manager.
The Official Receiver has said the company is to continue trading during the liquidation, but with 5,000 jobs at risk and those in the supply chain left hanging, the business landscape has been put into turmoil.
Our insolvency partner, Michael Mulligan, shares his thoughts:
“The news comes as a devastating blow for those in British Steel’s workforce and supply chain. As the UK’s second biggest steel manufacturer, its downfall will undoubtedly have a huge impact on the industry.
“Brexit has altered the manufacturing landscape and British Steel’s business has been restricted by EU carbon bills, as well as by falling order numbers. It was inevitable that there would be casualties and it looks like British Steel’s time had come.
“A £30 million bail-out may seem a lot to ask, however, compared to the amounts the Treasury has had to provide to other struggling businesses, this amount is relatively significant. Sadly, it appears the Government felt British Steel was not worth saving.
“When a company of this size collapses, the employees and the supply chains get hit the hardest. To avoid a Carillion-style domino effect, customers and suppliers must take decisive action early.
“Opening dialogue with insolvency officeholders as soon as possible, as well as seeking advice on individual directors’ duties, can help suppliers mitigate the repercussions of a large customer collapse. Retention of title clauses are a powerful way to recover owned goods quickly, minimising the overall impact on their margins.”.