A major client of Britain’s third largest steelmaker has been forced to bring in administrators, adding to the financial gloom that is engulfing the industry.
Sky News has learned that Aartee Bright Bar, based in the West Midlands and employing 250 people, has this week sued Alvarez & Marsal to deal with an insolvency process.
Liberty Steel is part of the industrial conglomerate headed by Sanjeev Gupta.
Mr Gupta is said to have close ties to Ravi Trehan, the founder of Aartee, while Greensill Capital, the controversial supply chain finance group that itself collapsed in 2021, is said to have financed a number of transactions between the two.
Michael Magnay, Joint Administrator at A&M, said in a statement to Sky News: “Like many companies in its industry, Aartree Bright Bar has faced significant headwinds due to the challenging economic environment and fluctuating steel prices.
“Against this backdrop, administrators have been appointed and we are exploring available options to preserve value.”
A steel industry source said on Tuesday that Liberty Steel would be an obvious buyer of Aartee Bright Bar assets outside the administration.
A spokesman for Liberty Steel declined to comment, though a source close said it would “look into how it might help”.
Aartee, which also has offices in Lancashire and Wales, is a manufacturer, stockist and distributor of steel products.
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A statement on behalf of Aartee Bright Bar, issued by email from Aartee Group, said: “Despite the very significant challenges facing the UK steel industry, Aartee Bright Bar (ABB) has made regular and substantial payments to its creditor FGI It is therefore disappointing that FGI has elected to enforce a small remaining debt, which the company plans to pay off in the very near future.
“ABB’s management will work quickly to ensure that the matter is resolved quickly with the trustee.”
The insolvency comes amid talks between the government and Liberty Steel’s two larger competitors – Tata Steel and British Steel – over £600m of taxpayers’ money to support their transition to greener electric arc furnaces.
Funding for British Steel has been called into question by the Chinese owner’s plan to cut around 800 jobs, mainly at the Scunthorpe plant.
Mr Gupta also announced proposing to cut hundreds of jobs in its UK operations.