British Steel has appealed to ministers for an emergency cash injection of around £80m to avert the company collapsing with the loss of thousands of jobs.
The company, which employs 4,500 staff mostly at its Scunthorpe steelworks, confirmed it had asked for more cash on top of a £120m loan negotiated with ministers last week to cover its bills for an European Union climate credits scheme.
Ministers are reportedly drawing up contingency plans to deal with the potential collapse of the company, which was saved by private equity firm Greybull Capital in 2016 and recently returned to making profit.
From Scunthorpe, here's Sky's Tom Parmenter.
It is still possible the funds to save British Steel will still be raised, sources have claimed. Torque understands the firm has met with its lenders and the government to discuss a new loan.
The UK's second largest steel firm employs 4,500 people, and about 20,000 indirectly via its supply chain.
A British Steel spokesman said: 'As we have previously commented, the uncertainties around Brexit are posing challenges for all businesses including British Steel, and we are holding constructive discussions with our stakeholders on how to navigate them.
British Steel has been squeezed in recent months by ongoing Brexit uncertainty weighing on the pound and repercussions of the US-China trade war.
"Discussions are continuing about a package of additional support to assist the company address broader Brexit-related issues, whilst continuing with [the company's] investment plans".
Naturally the GMB union wants the Government to act swiftly and guarantee the future of the company and the jobs it supports. At the same time, high energy costs are leaving steelmakers competing with their European competitors with one hand tied behind their backs.
Quoting people close to the process, Sky said insolvency experts have been placed on standby in case British Steel can not secure the funds it needs. "The government must also put UK steel at the heart of major infrastructure and ensure projects like the Royal Navy's new feet solid ships are built in the UK using UK steel". Anna Turley, Labour MP for nearby Redcar, said the firm "cannot be allowed to fail".