Liberty Steel plants are facing the closure of many UK plants following a rejection of a request for a £170 million (€195.9 million) bailout which has been defended by business secretary Kwasi Kwarteng.
This comes following the collapse of Greensil Capital, a major financial backer for the firm's parent company, GFG Alliance, which fell into administration last month, leading to as many as 440 staff facing redundancy.
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A further 5,000 are in jeopardy at the parent group itself owing to the company owing "many billions" in debt.
Greensil has been at the centre of a recent controversy at Westminster, following news former PM David Cameron was lobbying Chancellor Rishi Sunak to deliver on funds for the firm, although the secretary denies Cameron ever tried to contact him.
Kwarteng told MPs in the Commons at the Business, Energy and Industrial Strategy Committee the steel firm has "good assets" to use and also informed them the request for funding came from GFG itself, describing the business as "opaque."
Business Secretary Kwasi Kwarteng's official MP photo. Credit: Chris McAndrew via Wikimedia Commons
He added the business formed a strong pillar of the supply chain, but added it could be irresponsible to give money to the company when all its assets are unaccounted for, stipulating they "have to make sure the money stays in the UK."
Kwarteng added it was essential to work through GFG chairman Sanjeev Gupta's plans for refinancing the business and examining what local management planned to do before considering any kind of government intervention.
He added that the government would stand behind Liberty's workers and businesses but stressed it was impossible to tell what would happen.
"There is always that danger. It is something that I speak to government officials about and even the Prime Minister I have spoken to about it," he said, adding he "wants Liberty Steel to succeed" but that assets may be lost in the process.
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He added: "There is an incredibly talented and focused and passionate workforce who can make it work."
"I think it can work but what I won't rush into is giving any guarantees in this committee or in any other forum. It is a patient game."
The business secretary also added there was no stress on the British Business Bank (BBB) - which assigned Greensil as an accredited lender who could hand out Covid loans last year - by ministers or officials.
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