The Chinese owner of British Steel has hired a leading City law firm to explore the recovery of hundreds of millions of pounds it invested in the Scunthorpe-based company before the government seized control of its operations in April.
Sky News has learnt that Jingye Group has appointed Linklaters – which advised it on its purchase of British Steel in 2020 – to evaluate legal options for recouping part of its outlay.
It was unclear on Tuesday which potential routes Jingye was exploring with Linklaters, or whether a formal legal challenge to the government was under consideration.
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British Steel’s balance sheet bears debts worth close to £1bn, most of which is said to be owed to Jingye in the form of inter-company loans.
The Financial Times reported last month that ministers were exploring the controversial use of new legislation to wipe out those debts in order to smooth a path to the sale of the business.
The government and Jingye had been at loggerheads for weeks over the future of the Scunthorpe plant’s blast furnaces.
Since Jonathan Reynolds, the business secretary, moved to commandeer control of the UK’s second-biggest steel producer, the government has sourced additional supplies of raw materials to ensure the furnaces’ continued operations.
Jingye had been preparing to close them – with the loss of thousands of jobs – after seeking £1bn in state aid to facilitate the site’s transition to greener steelmaking.
Mr Reynolds has indicated that Jingye’s shares in British Steel – which has not yet been…
