What has happened since last week?
The Official Receiver has confirmed it has been appointed to oversee the process which will begin immediately in the hope of finding a new buyer but this is the best case scenario.
They said: “The immediate priority following my appointment at liquidator of British Steel is to continue safe operation of the site.
“I appreciate that this is a difficult time for the company’s employees and I want to thank them for their ongoing cooperation. The company in liquidation is continuing to trade and supply its customers while I consider options for the business.
“Staff have been paid and will continue to be employed.
“The court also appointed Special Managers to assist me with my work and they are engaging with staff and their representatives to keep them informed, as well as contacting British Steel’s customers”.
The Official Receiver has taken the unusual decision to continue trading through the compulsory liquidation, as employee contracts are normally terminated immediately on the making of a winding up order. However as this decision has been made the insolvency will act more like an administration, continuing to trade the business whilst seeking a buyer to maximise the chances of doing so.
Earlier this week we covered the reasons why and how British Steel arrived at this junction in another blog. Today we’re concentrating on suppliers and what happens to them.
Here are the three steps you should take immediately if your company is in the supply chain:
Assemble your creditor credentials
The liquidator will contact all creditors to confirm that the company has formally entered liquidation and to set up a creditors meeting which you can attend in person or by using a proxy.
You should take some time now to go through your records and assemble the paperwork regarding your relationship with British Steel – contracts, invoices, sales records etc. This will help provide proof of debt and secure your status as a creditor.
If you hold any British Steel assets then you should also inform the liquidator so they are aware. Conversely you may hold retention of title over goods delivered to British Steel. If this is the case you should provide all the details to the official receiver as soon as possible. If you are able to identify some of your goods they may be recoverable or you may be paid to allow their use.
It’s your decision but you should consider your future relationship with the company and whether you wish to continue to supply goods or services to them as there is a chance you will not be paid for them.
If British Steel emerges from liquidation with a buyer then you’ll have to decide whether you wish to continue trading with the new company and if so, under what terms. You could insist on payment up front or a guarantee from the new management that your business will be paid.
Prepare for the worst
Losing your main or one of your main clients will undoubtedly have an impact on your own company and finances
You should consider restructuring your own company debts to make them more manageable in the short term while you secure new work to replace the existing contracts. You could also be in a position to negotiate for more time and better conditions with your own creditors once you explain the situation to them. Some of them may be suppliers
Chris Horner, Insolvency Director with BusinessRescueExpert, said: “This is naturally a worrying time for everybody involved with British Steel. Our headquarters is close to Teesside so we saw first hand what happened to businesses supplying the Redcar SSI steelworks when it closed in 2015.
“We’ve worked with many companies in similar situations and can talk you through what you can do but the most important thing is to contact us quickly. The earlier you take action, the more options will be available to you. These situations are fluid and can move quickly so haste is essential.”
Call us today for a free consultation where one of our experts can give you advice on how to move forward. The longer you delay, the less options will be available to you so this should be your first step.
You’re naturally worried about facing any financial difficulties and unsure about what could happen.