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Staff at Britishvolt are warning the UK battery start-up may be “trading while insolvent”, after they were left unpaid for the past four months.
Two current staff said the company’s owner, Australian entrepreneur David Collard, who agreed to purchase the business out of administration earlier this year, has left its bills and staff unpaid for months.
One employee said staff were “at the mercy of David”. The person added: “Every week [the money] is coming the following week. I think the reality is we are currently trading while insolvent.”
To trade while insolvent is not against the law, but directors should only continue trading if they believe there is a reasonable prospect for avoiding an insolvent liquidation.
Directors continuing to trade with the knowledge that insolvency is unavoidable, risk being personally liable for a company’s debts. They could also face other sanctions and penalties, including a 15-year ban on acting as a director of a company.
On a call on Friday, Collard told the handful of remaining staff that he was in advanced talks with a potential investor, and said he expected money to come in this week, said two people who were on the call.
However, they said Collard has made such promises several times before, and no funds have arrived.
Another staff member said the business appeared unable to pay its bills and should be wound up. They added Collard had given “promises after promises after promises” that money would arrive.
“He’s always promising to raise the cash but he never does,” said another person involved in the administration process.
Collard declined to comment. He recently told associates that a new investor had signed an equity commitment letter for an investment that would allow the company to pay what is owed and meet its obligations.
Collard’s Recharge Industries has yet to pay former administrators EY for about £2.5mn of the agreed £8.6mn purchase price, according to two people, more than half a year after the original deadline for payment had passed.
EY on Monday said it “ran a thorough and competitive sales process” to find a buyer for the business. It said the £6.1mn paid so far was “materially above the next best alternative, deliverable offer received by the joint administrators”.
It added: “The joint administrators are taking steps to recover these further outstanding monies owed and continue to pursue options for the sale of the site in Blyth.”
When it launched in 2019 amid great fanfare, the company had plans to develop a UK battery factory with homegrown technology and had secured financial backing from the UK government as well as prospective orders from Mercedes-Benz.
However, it collapsed into administration earlier this year after running out of funds, and was bought by Collard, a former PwC partner. About 26 former employees were kept on following the administration.
EY, which drew criticism for running BritishVolt’s administration after being a longstanding adviser to the company, selected Collard as the preferred buyer for the business, over other offers that included a buyout from existing shareholders.
Collard’s aim was to resurrect the factory plans, although he has yet to purchase the land for the factory site in Blyth, said several people with knowledge of the arrangement. The site, reckoned to be one of the most promising for a battery factory in the UK, would now cost about £11mn to secure, the people added.
As a result of the long delays, the receiver for the land is pursuing interest elsewhere and has received approaches from other parties to buy the land, with Collard’s Recharge business no longer seen as a credible buyer, according to a person familiar with the matter.
Staff said their laptops stopped working last month, which they assumed meant that the IT company had not been paid. Some also received payslips from HR in recent months, but without the money ever landing in their accounts.
