A Newcastle-based robotics firm is set for a crucial insolvency hearing this morning.
Wootzano, once considered one of the brightest lights in the North East tech scene, is facing shutdown after a court order initiated by Innovate UK Loans froze its bank accounts for months.
Founder Dr Atif Syed labelled the scheme – ostensibly a supporter of innovative UK companies – an “insolvency accelerator” last year on social media.
With Wootzano subject to insolvency proceedings initiated by Innovate UK Loans, a source told BusinessCloud that a hearing is scheduled at the Court of Session in Edinburgh – Scotland’s supreme civil court – today at 10am.
The source added that its bank accounts remain frozen, leaving it unable to fund a legal appeal.
“The joint liquidators’ report submitted to the court identifies c.£237m of contracted distribution agreements, confirming a substantial underlying commercial foundation,” it said.
“As a result of the legal process in Scotland, its accounts were frozen, which in turn prevented the company from funding legal representation to challenge the action and it has taken several months to return the matter to court.
“Taken together, this raises the question of whether the current enforcement of government-backed innovation loans is pushing viable tech companies into insolvency due to process rather than performance.”
Dr Syed highlighted this last year as a “procedural trap” and said Innovate UK Loans Limited, part of UK Research and Innovation (UKRI), had petitioned the court to wind up his company.
He said last year that the move put the company in an impossible position under Scottish legal rules: “In Scotland, a company cannot speak in court without a solicitor.”
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.
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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 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.”