British Steel collapsed on Wednesday after the government said last-ditch talks with its owners failed to secure a financial rescue.
The High Court in London ordered British Steel Limited into compulsory liquidation, a statement said.
"British Steel Limited was wound-up in the High Court" on Wednesday, meaning its assets would be sold to help pay debts.
"The government has worked tirelessly with British Steel, its owner Greybull Capital, and lenders to explore all potential options to secure a solution for British Steel," said Business Secretary Greg Clark.
"We have shown our willingness to act, having already provided the company" recently with funds.
Tim Roache, general secretary of the GMB union, described the collapse of Britain's second-biggest steelmaker as "devastating news for the thousands of workers" in the UK.
Some 5,000 people are employed by British Steel and an estimated 20,000 more have links to the firm's supply chain.
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Greybull has blamed Brexit strains for its financial collapse, while the steel sector faces other uncertainties.
"While Greybull cannot be allowed to walk away scot-free and must be held to account for its stewardship of Britain's second largest steelmaker, ministers cannot wash their hands of the Brexit farce and ongoing uncertainty that has placed the company in difficulty," Steve Turner, assistant general secretary of the Unite union, said Wednesday.
"To do so would be a betrayal of a loyal workforce that has made great sacrifices to make British Steel a success and send economic shockwaves throughout the steel industry, UK manufacturing and the households of 20,000 workers in the supply chain who rely on the steelmaker for their livelihoods."
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