The company is a specialist producer of heavy forged and cast steel products for the global construction, oil and gas and marine sectors.
Today's announcement follows a troubled decade for the firm, which has been hit by fluctuating trading conditions and the placing of its parent company into administration in 2003.
Administrators had hoped to sell Sheffield Forgemasters as a going concern but could not find a buyer due to the extent of its pension fund and debt liabilities.
It was one of a number of companies that made up British Steel in 1967 and was later privatised to Sheffield Forgemasters in 1982, before being bought out by US firm Atchison Castings Corporation in 1998.
More than 75 per cent of the group's output is exported to areas such as Eastern Europe, Russia, North America, Japan and China.