Newcastle robotics firm Wootzano has resumed trading after the Court of Session in Edinburgh halted liquidation proceedings.
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 understood to be a rare outcome in UK insolvency cases.
The company had entered liquidation following enforcement action by government-backed lender Innovate UK Loans.
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 offered 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 operate under the supervision of a 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.
Taken together, the case represents an unusual combination of a company with a significant contracted order book returning from liquidation to resume operations.
The case draws attention to the challenges involved in insolvency proceedings concerning high-growth companies with substantial contracted revenues.
“We’re pleased to be able to resume trading and focus fully on delivering for our customers,” said Dr Syed.
“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 restarted operations, with deliveries recommencing and new orders being accepted.
The company says it is working with financial and legal advisors to ensure a stable path forward and expects to meet its obligations to creditors over the coming months.
‘Insolvency accelerator’
Dr Syed labelled the scheme – ostensibly a supporter of innovative UK companies – an “insolvency accelerator” last year on social media as he revealed that Innovate UK Loans Limited, part of UK Research and Innovation (UKRI), had petitioned the court to wind up his company
Wootzano had developed robots with a ‘sensing skin’ for fruit and vegetable packing and had expanded into the United States.
Dr Syed added: “A functioning DeepTech company can be silenced without ever being heard. This is not how innovation should die.”
The business took out an Innovate UK Innovation Loan worth £838,000 in 2022.
Dr Syed said the product was positioned as “patient, flexible capital for high-growth innovators”, with flexibility built into the contract.
However, he claims that when a funded subsystem failed to reach commercialisation, “no flexibility was offered”, and the case moved straight into a standard debt-enforcement route.
Dr Syed said he has been contacted by founders, investors and academics, as well as people inside Innovate UK and UKRI, who were shocked by Wootzano’s situation and shared similar experiences of the Innovation Loans programme.
He pointed to Innovate UK’s own portfolio data to argue that the scheme is not working as intended.
The figures he shared last year showed 290 companies funded, 228 still active, 44 in liquidation or administration and 17 dissolved.
Dr Syed said that means 61 companies – 21% of the portfolio – were already gone.
On Wootzano specifically, he said Innovate UK Loans placed the loan into default even though the funded subsystem had not commercialised yet – a point at which he believes the agreement allows discretion, restructuring or deferment. He labelled this as a “procedural trap”.
He said options such as loan-to-equity conversion were discussed but never progressed and also 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.
He added that senior leadership within Innovate UK and UKRI were not aware a petition existed.
In response last year, an Innovate UK spokesperson said: “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.”