Reshaping results

Fast impact. Sustainable results.

We help you respond to the challenges of COVID-19, providing trusted leadership in these urgent, critical and complex situations to help you recover and preserve value for a better future.

Case Study
The better the question The better the answer The better the world works
Case Study

How to determine a solid path forward in a liquidation

British Steel needed a buyer to avoid closure and to continue the iconic brand, but a sale was never guaranteed.

Case Study
The better the question The better the answer The better the world works
Case Study

Can heavy industry be reshaped for a sustainable future?

British Steel was in urgent need of a suitable buyer to avoid closure.

A sense of history comes to the fore when reshaping a traditional organization like British Steel. Since its establishment 150 years ago, British Steel has been central to European and nationwide steel production and employment in the industry. By directly and indirectly supporting 23,000 jobs, the steel plant in Scunthorpe – one of the company’s main sites, with others across the UK, France and the Netherlands – has a vital role to play in the lives and wellbeing of those connected to it.

However, steel production in the UK has tumbled from its peak in the 1970s and commercial pressures have increased in recent years, threatening these jobs and the local economy. Greater supply internationally has pushed down prices, making higher cost operators less competitive in the global markets.

As a result, heavy industry organizations like British Steel are in a state of transition. If they are to survive, these companies – and by extension the local communities they support – must transform to recover their value.

In the case of British Steel, it had become clear in 2019 that its cashflow position was no longer viable – it could no longer afford to buy necessary materials or carbon credits from the EU to let it continue trading. It was in critical need of a buyer and a fresh, sustainable business model in order to avoid closure. According to Antonius Ron Deelen, CEO of British Steel, “The real reason that British Steel got into the situation we were in before EY joined was twofold: the cashflow of the company and bad messaging; people did not see the real situation British Steel was in and, therefore, were not prepared to take the measures needed.”

In May 2019, the British High Court granted an order to place British Steel into compulsory liquidation. The Official Receiver was appointed as liquidator and he concurrently petitioned the Court to appoint Sam Woodward, Alan Hudson and Hunter Kelly of EY to act as Special Managers to assist the Official Receiver with his duties as liquidator.

  • The role of the Official Receiver and the Special Managers

    The function of the liquidator appointed by the Court is to secure all of the company’s assets, realise them and distribute proceeds to the company’s creditors.

    In the case of British Steel, the Official Receiver as liquidator was responsible for overseeing the entire liquidation process and statutory compliance, and with the assistance of the Special Managers also appointed by the Court, they together ensured the best outcome was achieved for the liquidation. EY, as Special Managers, ran parallel processes that prepared for both the wind down and closure of British Steel, as well as for the sale of the business as a going concern. The relative outcome to creditors of each scenario would ultimately dictate the future of British Steel.

British Steel’s legacy and its multi-generational workforce, who were heavily invested in the plant and its survival, made this insolvency unique. “The number of people we came across as third-generation family employees was mind-blowing,” says Sam Woodward, EY-Parthenon Turnaround and Restructuring Strategy Partner. This feeling of personal significance is echoed by Paul McBean, Community Union and Multi-Union Chairman of British Steel who says of the Scunthorpe plant, “Closure would have been devastating. We have other businesses in town, but the vast majority of businesses here rely on the steel industry.”

Both the Official Receiver and EY were aware of the importance of British Steel to its employees, suppliers, customers, local communities and the wider economy. However, emotion could not overrule legislation and the Official Receiver and EY had a role to fulfil to meet statutory obligations. Working with multiple stakeholders, EY set about devising a strategy for the liquidation that included planning for wind down and closure while in parallel assessing the possibility of realizing value from a sale of the business, in whole or in part. The ultimate aim was securing the best possible outcome from liquidation, and while the chances of a going concern sale appeared remote, the counter factual to closure needing testing.

Old railway track awaits recycling outside bsl scunthorpe plant
Case Study
The better the question The better the answer The better the world works
Case Study

In an interconnected world, think both local and global

EY’s international capabilities were crucial to delivering the best outcome.

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A bucket tilts over a furnace mouth at bsl scunthorpe plant
Case Study
The better the question The better the answer The better the world works
Case Study

Forging a new chapter of British Steel

Fresh investment in British Steel will protect livelihoods and boost value creation.

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New steel rails at bsl scunthorpe plant

What EY can do for you

We deliver solutions at pace, supporting clients as they recover, perform and improve. Whether you are a public or private company, government institution, investor or financial stakeholder, we work closely with clients with a focus on execution to transform financial and/or operational performance. We have extensive crisis management experience to help clients recover, preserve and create value.

We offer deep insight and practical on-the-ground support to help you answer:

  • How can I establish an effective crisis management team to get more control of the situation?
  • How can I build and secure liquidity, managing the impact of disruption between finance and operations?
  • How can I get more visibility on potential business risks arising from COVID-19 and give clear recommendations for action?
  • How can I protect business continuity?
  • Who can help me develop options for a rescue or recovery plan; then help me find capital to support it and negotiate with my stakeholders?

We offer the support you need to achieve your objectives:

  • Contingency planning and insolvency services

    Most restructurings need a “Plan B” — whether as a contingency plan to provide comfort for directors and stakeholders or, alternatively, for financial stakeholders to create a credible point of leverage to break the deadlock and help all parties reach a consensual deal. In particularly challenging situations, when directors and businesses are facing increasing risks and challenges to continued trading, we create the time, space and environment to develop and deliver the right solutions.

    We work with management and financial stakeholders to use the pace, protection, powers and flexibility available under insolvency laws to address the issues threatening a business’ survival. We use contingency planning and insolvency solutions to create restructuring legacies by increasing the chance of a consensual restructuring through a credible “Plan B,” delivering a rescue that could not otherwise be achieved, preserving and recovering value, stabilizing critical services, and protecting jobs or by providing a controlled exit.

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  • Corporate simplification services

    Group structures can become increasingly complex through M&As, JVs and organic growth. This can lead to increased costs, as well as difficulties managing risk, simplifying operations, improving transparency and complying with changing regulations.

    We have experience supporting the complete spectrum of organizations, whether large multinational companies seeking to reduce their global entity footprint, or a small domestic organization looking to remove a single entity from its structure for a specific purpose. Our team integrates restructuring, tax and financial consulting knowledge to help organizations assess, rationalize and simplify their legal entity structures across the following key phases of corporate simplification: setup, group complexity analysis, program management, due diligence, and issue resolution and entity eliminations.

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  • Non-performing loans services

    Non-performing loans (NPLs) remain a challenge for banks, particularly in these times of economic uncertainty.

    Our loan portfolio solutions team brings together experienced operators and deal advisors to advise financial institutions about their non-performing loan portfolios and also the buyers of those portfolios, delivering value through our breadth of knowledge and expertise.

  • Liquidity and working capital services

    The adage that “cash is king” is more relevant today than ever. Dynamic and disrupted markets, geopolitical uncertainty, and ever-growing corporate transparency are putting increasing pressure on companies’ liquidity and cash flows. Many management teams struggle to sustain good control over short-term cash flows and the working capital that drives them, leaving the business vulnerable to market and operational changes.

    We have experience supporting the complete spectrum of companies, whether a successful business seeking to enhance shareholder value or an organization experiencing a cash crisis. We help you develop the three main ingredients of strong working capital management: identification of cash-generating opportunities, cash flow forecasting, and visibility and control through our advanced digital analytical techniques.

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  • Interim management: Chief Restructuring Officer/Advisor

    EY can help with interim management acting as a Chief Restructuring Officer (CRO) and offering Chief Restructuring Advisor (CRA) services. Restructuring or turning around an organization brings many challenges on top of the daily demands of running a business, for example: managing competing agendas, creating time to develop options, knowing which option is the right one when information may be imperfect and executing decisions at pace to maintain stakeholder support in a stressed environment.

    We create understanding, alignment and support with internal and external stakeholders. We focus on actions that deliver transformational outcomes and provide interim management solutions, including offering a CRO or CRA, to help you deliver results.

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  • Preserving stakeholder value

    Stakeholders are asked to respond quickly when businesses underperform, or suffer liquidity shortfalls or value erosion. We help provide support in a rapidly changing environment when information is incomplete, agendas no longer align and confidence is reduced.

    We work with all stakeholders to preserve, create and realize value through restructuring advice, critical appraisal of a company’s ongoing viability, stakeholder intermediation, options analysis and entity priority analysis.

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  • Debt restructuring, raising capital and M&A services

    Preserving value for a company and its stakeholders often requires a reshaping of the capital structure and assets in the portfolio. This is often achieved by a combination of financial restructuring and liability management, together with M&A activities to dispose of non-core assets and potentially source new equity. EY professionals are experienced in helping you analyze, structure, negotiate with stakeholders and execute the best possible solution.

    In the USA, Ernst & Young Capital Advisors, LLC (EYCA) is a registered broker-dealer and member of Financial Industry Regulatory Authority (FINRA: finra.org) and offers investment banking services with access to EY debt restructuring, M&A, debt capital markets and equity capital markets professionals across the globe.

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  • Rapid value creation services

    Most businesses are likely to experience operational challenges and underperformance at some point. While the root causes can be buried, the negative impact can be highly visible — profit warnings, declining performance metrics, failure to achieve project milestones, loss of customer contracts or management departures.

    Whether a business is in crisis or is simply facing an operational challenge, our team is experienced in helping management teams identify and prioritize the most critical issues, stabilize the business, establish a leadership and stakeholder consensus around the solution, in order to rapidly improve performance and create value.

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  • Private equity value creation services

    Our hands-on value creation leaders help PE companies (and sponsors) deliver their investment case by accelerating cash and profit improvements, from ideation to results. We prioritize our involvement to focus on situations we know best: complex carve-outs, functional transformations, and instances of stress or distress.

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Restructuring and turnaround tax services

At whatever stage an organization is on the performance curve, tax is an area that cannot be overlooked. Tax strategies can have an enormous impact on your business recovery. When well managed they can be vital in enabling a business turnaround, however when ignored they can eliminate options.

Whether your business is underperforming, stressed or distressed our global network of tax professionals can help you create, preserve or recover value. The global EY network combines local tax knowledge across a broad spectrum of industry sectors, to help you make informed decisions and navigate the tax implications of all your business-critical decisions.

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Forging a new chapter of British Steel

Watch how EY quickly mobilized and physically integrated teams across all British Steel’s facilities in the UK, France and Netherlands to get the best outcome for liquidation.

How can business build resilience for what’s next?

The EY Enterprise Resilience Tool can help you prioritize your actions and reframe your future beyond the pandemic.

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Contact us for immediate support through these volatile and uncertain times

We have a clear view of the critical questions and new answers required for effective crisis management, business resilience and continuity.

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