British Steel entered liquidation on Wednesday, after failing to secure a loan from the government.
The collapse places 5,000 jobs at risk, alongside a further 20,000 in the supply chain.
Earlier this month the government granted British Steel a £120 million to cover an EU carbon bill.
The company had been after additional funds to avoid calling in administrators.
However, the government Business Secretary Greg Clark MP concluded that it had to turn down the request as it would not be lawful.
He released the following statement earlier today on the matter:
“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.
We have shown our willingness to act, having already provided the company with a £120 million bridging facility to enable it to meet its emissions trading compliance costs.
The government can only act within the law, which requires any financial support to a steel company to be on a commercial basis. I have been advised that it would be unlawful to provide a guarantee or loan on the terms of any proposals that the company or any other party has made.
This will be a deeply worrying time for the thousands of dedicated British Steel workers, those in the supply chain and local communities. In the days and weeks ahead, I will be working with the Official Receiver and a British Steel support group of management, trade unions, companies in the supply chain and local communities, to pursue remorselessly every possible step to secure the future of the valuable operations in sites at Scunthorpe, Skinningrove and on Teesside.”
Despite commencing the wind down process, British Steel will continue to operate as normal, as it looks to locate a potential buyer.
EY has been tasked as the administrators to oversee the procedure.
According to reports, employees wages have been paid, and the government is set to cover the remainder of the costs.
Nevertheless, there is continued worry over the future of the thousands of jobs that may be lost.
