British Steel is on the verge of administration within 48 hours unless a £30m rescue deal can be agreed with the government.
If additional funding cannot be secured 4,000 British Steel jobs would be put at risk along with a further 20,000 in its supply chain.
Union leaders are set for crunch talks with the government on Tuesday, with administrators EY expected to be called in as soon as Wednesday if a deal is not reached.
The company had asked for a package of support to tackle “Brexit-related” issues, raising fears for its future.
A collapse would hit workers at British Steel’s main plant in Scunthorpe as well as sites in Cumbria, Teesside, Cumbria and North Yorkshire. Nationalisation or a management buyout are also understood to be under consideration.
Business Secretary Greg Clark is meeting with the Unite union early on Tuesday with more clarity expected in the next few hours.
British Steel’s lenders, as well as shareholder Greybull Capital have agreed to put extra money into the company, according to Sky News.
The company is requesting £30m of government funding to allow it to continue, down from £75m previously.
Last week it announced it had the backing of its key stakeholders and that operations would continue as normal.
It said on Thursday: “We are pleased to confirm that we have the required liquidity while we work towards a permanent solution.”
A Unite spokesperson said: “We would urge Greybull to reach a deal with the Government. Thousands of jobs depend on the outcome.
“And we will be speaking with the Government first thing in the morning.”
In a statement, the Department for Business, Energy and Industrial Strategy (BEIS) said: “As the business department, we are in regular conversation with a wide range of companies.”
Why is British Steel in trouble?
It has been struggling with falling orders from European customers which it says are linked to uncertainty around tariffs on steel after Brexit.
Steel makers have also been damaged by an escalating trade war between the US and China.
Problems go back further however. In June 2016, just weeks before the referendum, Greybull Capital bought was then part of Indian conglomerate Tata for £1.
Greybull, a London-based private equity firm which specialises in buying up companies in financial distress, claimed it would revive the company's proud history.
Sajid Javid, business secretary at the time hailed the deal as securing a "sustainable future for world-class steel making in this country".
The unit was renamed British Steel and it has struggled ever since, prompting additional scrutiny of Greybull's role.
GMB national officer Ross Murdoch said: “Given this latest speculation, these are understandably extremely difficult times for our members.”
“Yesterday the government, alongside trade unions and employers, signed a UK Steel Charter at Westminster. They must now put their money where their mouth is.
“GMB calls on the government and Greybull to redouble efforts to save this proud steelworks and the highly skilled jobs.”
The shadow minister for steel, Gill Furniss, called on the government to intervene, saying the UK steel industry was critical to the UK's manufacturing base and strategically important to UK industry.
“Administration would be devastating for the thousands of workers and their families who rely on this key industry in a part of the country which has not had enough support and investment from government over decades,” she said.