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Trail of destruction

As British Steel enters insolvency, Unite calls for probe into owners Greybull
Hajera Blagg, Wednesday, May 22nd, 2019

Unite has secured assurances from the government today (May 22) after it was confirmed that British Steel has entered insolvency, placing 5,000 direct jobs at risk and many more jobs in limbo in the wider supply chain.


Unite assistant general secretary Steve Turner confirmed that he spoke this afternoon to business secretary Greg Clark, and he said he received personal assurances that the government “will underwrite the receivership process, which means that people’s wages and suppliers will continue to be paid and that the business can continue to operate as normal”.


“While it does not represent the move into public ownership that Unite was seeking, it does place British Steel on a secure footing until a buyer for this world class business can be found,” Turner said – a point that he also raised in a new video:


Control of British Steel has now been passed to the official receiver, David Chapman, an employee of the Insolvency Service, who will now run a compulsory liquidation with the support of accountancy firm EY.


A court granted an application by British Steel directors to enter insolvency today (May 22) after British Steel owners Greybull, its lenders and the government failed to reach an agreement yesterday that would have staved off insolvency.


Turner said that he expects the latest government assurance “which gives British Steel workers some immediate peace of mind, to be in place for as long as it takes. British Steel customers should be confident that orders will be fulfilled and that it is business as usual”.


‘Destruction capitalism’

Unite has slammed private equity firm Greybull, which bought British Steel for a £1 and has a known history of running into the ground ailing businesses it buys on the cheap, leaving taxpayers to foot the bill.


Branding their tactics ‘corporate destruction capitalism’, the union highlighted a series of failures Greybull has presided over. The most infamous of these failings was its takeover of the airline Monarch, whose 2017 collapse required taxpayers to fund the return flights of 110,000 people stranded on holiday. At a cost of £60m, it was the largest peacetime repatriation in history.


While hundreds of people lost their jobs, Greybull, which took over Monarch in 2014, may have walked away with as much as £15m in profit from the liquidation.


Greybull, who were investors in the controversial takeover of Comet, first gained notoriety following the electricals chain’s 2012 collapse, which saw more than 7,000 of people lose their jobs and creditors lose millions of pounds. It has been described “the biggest raid in British corporate history” – it’s been reported that Greybull, as in the case of Monarch, profited from Comet going bust, while leaving the taxpayer with a £45m bill in unpaid taxes.


The private equity firm has also overseen the failure of sports bar chain Rileys and convenience store chain M Local.


It has now been revealed that Greybull’s initial contribution to British Steel amounted to only £20m of its own money. In the two years since Greybull took over the company, it siphoned off £6m from British Steel in management fees. It also charged the ailing steel firm, whose workers toiled and sacrificed to return it to profitability, a whopping £17m a year in interest on loans it provided at a rate of 9 per cent.


Turner said that Unite is now calling for “a full investigation into the financial engineering of Greybull that has left the taxpayer picking up the tab for a trail of corporate destruction which has wreaked havoc on the lives of working people.”


“British Steel workers are top class and have battled through adversity and uncertainty,” he added. “Any new owner will be lucky and privileged to have them as their employees. It is vital that any buyer acquires the whole of the company and that it isn’t sold off piecemeal to disaster capitalists wanting to make a quick buck.”


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