Chinese group Jingye hires lawyers to recover British Steel cash

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.

Money latest: How much does it cost for a comfortable retirement? 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 formally nationalised - are worthless, and that the government does not intend to offer to pay to acquire them.

A Jingye spokesperson said: "Jingye can confirm that Linklaters has been appointed; they were the original advisers on the acquisition in 2020." A spokesman for the Department for Business and Trade said: "We acted quickly to ensure the continued operations of the blast furnaces but recognise that securing British Steel's long-term future requires private sector investment. "We are working closely with Jingye and a range of third parties on options for the future, and we will continue work on determining the best long-term sustainable future for the site.".