Under-pressure industrial giant Liberty Steel has signed an outline of a deal that could see its creditors recoup at least some of its money and allow the company to keep going.

Sanjeev Gupta’s business said that the deal – although it is merely “a term sheet subject to contract on an agreement in principle” – could allow it to restructure the debt that it borrowed through now collapsed lender Greensill and Credit Suisse.

The deal was hailed as a “major step in the group’s refinancing”, but the business did not reveal any details of what it contained.

This is a major step forward in our restructuring and transformation and we will now work at pace with the creditors to prepare and execute the agreement

On Tuesday sources told the Financial Times that Liberty’s lenders could be paid back up to 55% of what they are owed, but the final figure is expected to be significantly less.

“After several months of negotiations, we have now reached an agreement in principle that will provide recovery for the creditors and will significantly deleverage and derisk Liberty,” said Liberty Steel’s chief transformation officer Jeffrey Kabel.

“This is a major step forward in our restructuring and transformation and we will now work at pace with the creditors to prepare and execute the agreement.”

Liberty said that it would now try to reach a similar deal to restructure the debt of its European steel business.

The current deal is still subject to approval by the companies involved. But in the meantime, the creditors have halted their winding-up petitions against Liberty.

Lenders file winding up petitions with a court when they believe that the company they have lent money to will not be able to pay it back.

A court can then order the company to shut down and sell off its assets to raise cash to pay off at least part of the debts.

Liberty has been fending off winding-up attempts for months ahead of this deal.