The former board of Arrium was warned it would be difficult to get its lenders to agree to forgive as much as half the money owed to them, which would make a proposal to restructure its debt tough to get over the line, the lawyer for the collapsed steelmaker’s liquidator says.

Lenders were first made aware of a proposed capital restructure from GSO Capital, a subsidiary of private equity firm Blackstone, on February 22, 2016. The proposal was agreed by the Arrium board and would require lenders to agree to a 45 per cent haircut to their owed debts, or a total of $1.238 billion, according to a presentation by investment bank Lazard to the board on February 4, 2016.