Government takes control of UK's third-largest steelworks

The move has put almost 1,500 jobs across Rotherham and Sheffield at risk.

The High Court granted a compulsory winding-up order for Speciality Steel UK (SSUK) as it owes creditors hundreds of millions of pounds.

It will be placed in the hands of the Official Receiver and managers from consultancy firm Teneo, which has been appointed to run it on behalf of the liquidator.

Judge James Mellor found the company was "hopelessly insolvent" with just £650,000 in the bank and a monthly wage bill of £3.7 million.

The Government acknowledged it was a "deeply worrying time" for staff at Speciality Steel after the High Court confirmed it would face a compulsory liquidation.

A Government spokesman said: "We know this will be a deeply worrying time for staff and their families, but we remain committed to a bright and sustainable future for steelmaking and steelmaking jobs in the UK.

"It is now for the independent Official Receiver to carry out their duties as liquidator, including ensuring employees are paid, while we also make sure staff and local communities are supported."

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The government has agreed to cover wages and the cost of the plant until a buyer is found.

Judge Mellor said: "It is quite clear that there are special managers lined up who have the support of the government.

"I consider by far the preferable approach is to make a winding up order."

Liberty Steel, the parent company of SSUK, has branded the decision to put the firm into compulsory liquidation as "irrational"

Jeffrey Kabel, chief transformation officer, said it would "impose prolonged uncertainty and significant costs on UK taxpayers for settlements and related expenses, despite the availability of a commercial solution".

Ryan Perkins, for Greensill Capital, one of the creditors, told a hearing at the Insolvency and Companies Court on Wednesday that restructuring plans have failed and the court has given adjournments "several times".

Responding to the latest development with Liberty Steel, South Yorkshire's Mayor, Oliver Coppard, said: "Today’s news about Liberty Steel is difficult, but offers the opportunity for clarity and a path forward. There is and will continue to be a period of uncertainty for workers at Liberty’s two sites in South Yorkshire.

"So I welcome the positive comments from the Secretary of State for Business in the wake of the Court’s decision. I now want to see swift progress from government to safeguard the unique steel-making capabilities we have here in our region.

"I will be seeking a conversation with Ministers as a matter of urgency and will do everything I can to make sure that workers at Liberty Steel and the steel industry that is so integral to our identity, have the brightest possible future."