Liberty Steel Group has entered into a standstill agreement with Greensill Bank, its largest creditor, on the debt facilities relating to its European steel businesses.
Under the agreement all enforcement actions are paused between the parties over the Greensill Bank debt facilities provided to Liberty in 2019.
The deal should enable Liberty to develop a longer term sustainable financing structure, according to a statement from parent company GFG Alliance.
It is valid until 31 October and may be extended until the end of 2022.
Detailed due diligence and information exchange continues between the two parties.
Last March, the future of the company was thrown into doubt when its main financial backer, Greensill, filed for administration.
Efforts by the steel group to disentangle itself from its financier were made more complicated because Greensill has made loans to multiple entities within GFG, secured against sales made within the group.
A Liberty spokesperson said: “Today’s standstill agreement with Greensill Bank demonstrates we are getting close to a consensual debt restructuring that is in the best interests of all our stakeholders.
“We are working intensively towards a settlement with our major creditors in a timeframe which would obviate the need for a legal battle.
“Our core businesses continue to perform well and are operationally strong, despite some economic headwinds.”
GFG Alliance is a collection of businesses and investments owned by Sanjeev Gupta and his family.
The alliance is structured into three independent industrial pillars; Liberty Steel Group, Alvance Aluminium Group and SIMEC Energy Group.
The wider group employs 35,000 people, across 10 countries and has revenues of around $20bn.
Liberty Steel has 12 steel and aluminium plants in the UK, directly employing around 5,000 workers, but supporting thousands more in the supply chain.
Scottish operations include steel plants in Motherwell and Clydebank, as well as a smelting plant near Fort William.
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