The Government is poised to take over operations at Britain’s third largest steelworks, aiming to save 1,500 jobs at Sanjeev Gupta’s Rotherham-based factory.

The High Court heard on Wednesday that the Government’s official receiver is ready to step in as administrator if Mr Gupta is unable to finalise a rescue deal involving £75m from US giant BlackRock.

“The official receiver is prepared, should SSUK [Speciality Steel UK] enter into compulsory liquidation, to take control of SSUK’s affairs,” the Department for Business and Trade said in a letter to Mr Gupta’s creditors.

The letter said the Government had held discussions with SSUK but had not been negotiating any taxpayer financial assistance to either Mr Gupta or any potential buyer of the company.

The Government said it was also not discussing putting SSUK under state ownership. That “would be the subject of formal ministerial decision, and no such decisions have been made”.

The submission comes as creditors of SSUK seek to shut down the company in order to claim their debts.

Mr Gupta is looking to avoid his company falling into the hands of the official receiver by in effect liquidating the company himself and using his fresh BlackRock funding for what the court was “a management buyout”.

In a court hearing, Judge Sally Barber said she could not decide on the spot whether to wind up SSUK – in effect putting the company under potential government management – or to let Mr Gupta go ahead with his plan.

The judge said she needed more information on what would happen, saying she could not decide “on a completely blind basis” having not seen a draft application from the official receiver.

The matter is likely to return to court in the coming days, piling pressure on the Government to be more explicit about its plans for the cash-strapped plant.

This is a developing story.

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