British Steel, the country's second-largest steel producer, will be placed into administration as early as Wednesday, Sky News reported, jeopardizing some 25,000 jobs.
Administrators from EY are in court this morning to finalize an insolvency process, the broadcaster said, after a failure to secure a £30 million ($38 million) loan from the government.
Owned by investment firm Greybull Capital, British Steel employs around 5,000 people, mostly in Scunthorpe, in the north of England, while 20,000 more depend on its supply chain.
Signs of the ripple effect on related companies were already beginning to emerge.
Hargreaves Services, which supplies materials handling and other services to British Steel, said if the company ceases to trade, this could reduce Hargreave's revenue in next full year by £11 million and its profit before tax by about £1.3 million.
"The situation with British Steel is very difficult," Michael Gove, Britain's environment minister, had earlier told BBC radio.
"I'm afraid I cannot pre-empt what the business secretary may say later," he added.
Greybull Capital, which specializes in trying to turn around distressed businesses, paid former British Steel owners Tata Steel a nominal one pound in 2016 for the loss-making company.
British Steel had asked the government for a £75 million loan but has since reduced its demand to 30 million pounds after Greybull agreed to put up more money, according to a source who is close to the negotiations.