SONAE has admitted liability for a huge fire which ripped through its Kirkby site in 2011.
The Portugese company, which stopped production at Kirkby last year, is facing a class action compensation claim from 10,000 people who say they suffered as a result of the emissions from the plant during the blaze.
Birkenhead-based lawyers Camps, who are leading the massive litigation against the woodchip factory, said the admission was a “significant milestone” on the road to securing pay-outs for Knowsley residents who claim their health suffered as a result of the fire.
Lead solicitor Anthony Wilson said: “The extensive fire at the plant last year burned for eight days, releasing toxins which thousands of local people are claiming had an adverse impact on their health.
“Sonae has formally filed its defence through the High Court.
“The defendant admitted liability, subject to causation which means each claimant has to show that they suffered personal injury and/or nuisance as a result of the fire.”
The blaze, in which some employees and firefighters were injured, has led to what could become the largest class action of its kind in UK legal history.
Mr Wilson, who has led an 18-month investigation into the health concerns of residents, said his practice interviewed more than 4,500 claimants face-to-face to ensure every client represented had a genuine case.
He added: “The residents we have spoken to come from a range of age-groups and backgrounds, from very young people to the elderly.