Concerns have been raised over the future of more than one hundred steel workers in Newport after Liberty Steel's lender filed for administration.
Greensill Capital was the main financial backer of businessman Sanjeev Gupta's group GFG Alliance, which includes Liberty Steel.
The lender has "fallen into severe financial distress" according to its lawyers and has no way of repaying a $140m (£101m) loan, the Financial Times reported.
Liberty Steel employs around 180 people in Newport, but announced plans to cut 72 jobs there in January 2020.
Further job losses would come as a big blow to the Welsh steel industry, after Tata Steel announced it is in talks to separate its UK and European operations.
Greensill Capital lends money to businesses so they can pay their suppliers. Its lawyers appeared in court on Monday to appoint administrators from Grant Thornton.
The lender is expected to be part bought by Apollo Global Management, with news due within the next couple of days.
But the deal will not include Greensill's exposure to GFG Alliance.
Mr Gupta's business empire employs around 5,000 people in the UK - the majority of whom work for Liberty Steel.
Labelled the "saviour of steel", the businessman has taken on a number of UK production sites that had been under pressure from cheap overseas competition.
However GFG has itself faced pressure, and has relied on Greensill for around five billion dollars (£3.6bn) worth of funding used to pay its suppliers.
A spokesperson for GFG Alliance said: "Our operations are running as normal and our core businesses continue to benefit from strong market conditions generating robust sales and cash flows.
"Our operational efficiency programme has improved profitability and we are making progress in our discussions with financial institutions that can help diversify our funding. We are keeping our employees up to date and will provide further updates as we deliver our plans."
A spokesperson for trade union Community said: "Sanjeev Gupta needs to tell us exactly what the administration means for Liberty's UK businesses and how he plans to protect jobs.
"The future of Liberty's strategic steel assets must be secured and we are ready to work with all stakeholders to find a solution."