British Steel has been ordered into compulsory liquidation after talks with the government failed to secure a bailout, threatening the jobs of about 5,000 employees, with another 20,000 jobs in the supply chain.
The steelmaker had requested an emergency $38m bailout loan from the British government following dwindling European sales amid Brexit uncertainty, and an ill-fated decision to sell off excess carbon credits earlier this year.
Just three weeks ago, the government had given a $150m loan to the company.
“The government can only act within the law, which requires any financial support to a steel company to be on a commercial basis,” Business Secretary Greg Clark said in a statement emailed to Al Jazeera “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.”
The company’s 5,000 workers are mostly at a giant plant in the northern town of Scunthorpe, and a further 20,000 jobs are dependent upon its supply chain.