Newcastle robotics firm Wootzano has resumed trading after the Court of Session in Edinburgh halted liquidation proceedings in.
It followed the confirmation of approximately £237 million in contracted distribution agreements in a report submitted to the court.
The court granted a “sist” – a Scottish legal mechanism that pauses the liquidation process and allows a company to continue trading – in what is described as a “rare” legal move.
The company had entered liquidation following enforcement action by government-backed tech lender Innovate UK.
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A report submitted to the court by the joint liquidators accepted that there were substantial contracted distribution agreements and concluded that returning the company to trading may offer the best outcome for creditors.
The court approved a supervised return to trading intended to allow Wootzano to fulfil existing contracts, continue operations, and repay creditors.
For a transitional period, the company will now operate under the supervision of court-appointed interim managers – Laurence Pagden and Giuseppe Parla of Menzies LLP – alongside newly appointed company director Anthony Pollock.
As part of the court-approved arrangements, Wootzano founder Dr Atif Syed has stepped down as a director but will continue supporting customer relationships and technical operations.
Syed said: “We’re pleased to be able to resume trading and focus fully on delivering for our customers. Throughout this process, the strength of the business and the demand for our technology have remained clear.
“Our priority now is execution – delivering on our commitments and continuing to build the company on a stable footing.”
Wootzano has already restarted operations, with deliveries recommencing and new orders being accepted.
The company added that it is working with financial and legal advisors to ensure a stable path forward and expects to meet its obligations to creditors going forwards.
Syed last year criticised the Innovate UK scheme, dubbing it in a social media post as an “insolvency accelerator” despite its stated aim of funding and supporting innovative companies.
Wootzano, which specialises in automation for food packaging and has developed robots with a ‘sensing skin’ for fruit and vegetable packing, has expanded into the United States and taken significant orders from Japan. It took out an Innovate UK Innovation Loan worth £838,000 in 2022, however, Syed claims that when a funded subsystem of the operation failed to reach commercialisation, “no flexibility was offered”, and the case moved straight into a standard debt-enforcement route.
Syed added that he has since been contacted by founders, investors and academics, as well as people inside Innovate UK and UKRI, who shared similar experiences of the Innovation Loans programme.
Syed also shared figures last year that suggested all may not be working as intended at the programme. According to his data, of 290 companies funded by the loans, 228 were still active, 44 in liquidation or administration and 17 dissolved, meaning 21% of the portfolio had already folded, despite the product being touted as “patient, flexible capital for high-growth innovators”, with flexibility built into the contract.
On his own situation, he said Innovate UK Loans placed the loan into default even though the funded subsystem had not commercialised yet – a point at which he believed the agreement allows discretion, restructuring or deferment.
Syed said options including loan-to-equity conversion were discussed, but never progressed, and claimed communication later stopped and enforcement continued despite Innovate UK Loans allegedly relying on 2022 accounts rather than current data, while being aware Wootzano had signed contracts worth £537 million and was expanding strategically.
An Innovate UK spokesperson said at the time: “Innovation is inherently risky and new technologies, markets and businesses can fail. This is why Innovate UK provides loans to SMEs to bridge the gap between late-stage R&D and commercialisation. The loans are patient capital and are flexible.
“We can confirm that Wootzano received R&D funding from Innovate UK (a combination of grants and loans totalling over £2.5m), as this is a matter of public account. However, we cannot comment further on individual cases.
“Publicly funded loans are important for supporting innovation that’s too risky for traditional finance, often working together with private investment – supporting businesses and technologies that have the potential to create new industries, jobs and solutions, even though not all will succeed.”
Prolific North has contacted Innovate UK for further comment.
