AN engineering firm in Derby which owed creditors – including dozens of employees – almost £4m is being forced into liquidation.
The action has been taken against Hydra-Valve, which specialised in pipeline technology and employed about 30 workers based in Spondon.
The firm wanted creditors to agree to a Company Voluntary Arrangement – where it would continue to operate and pay back creditors – but Derby County Court issued a winding up order.
A document, prepared on behalf of Hydra-Valve by business recovery and rescue firm Silke & Co, listed 190 creditors which claim they are owed a total of £3,828,312 by the firm.
This includes £192,577 to 28 former employees, mainly from the Spondon site in Stoney Cross Industrial Estate, and a few from the firm's former base in Stevenage.
It also states £37,516 is owed to Derby City Council and £275,209 to HM Revenue and Customs.
Former staff have told the Derby Telegraph they arrived into work on March 24 to find a letter on their desks, saying a major investor was coming in to do a stock take and they were to be away from work for two weeks on full pay and to leave their cars, laptops and phones.
On May 9 they received a letter which stated their contracts were being terminated with immediate effect.
One former employee from the Spondon site, who is owed more than £20,000 by the firm, which includes money he should have received for a six-month notice period and wages, said: "I lived on my savings but I felt sorry for the young lads who struggled to support their families.
"Because our contracts were not terminated until May, no-one could claim dole. One lad resorted to selling his things on eBay."
Richard Smith, 54, who worked at the Stevenage site of Hydra-Valve, is listed as being owed almost £30,000.
He said: "Staff should have been laid off earlier. Instead, it was just dragged out."
Robert Waldron, who also worked at Stevenage, said he was owed £12,000.
The 47-year-old said: "Everyone has families to support and bills to pay. I don't think I will see a penny of the money I am owed."
Steve Foster, former direct of Hydra-Valve who is now living in Dubai, said last night that some of the larger values on the creditors list did not correspond with the company's accounts and needed to be validated.
Mr Foster appears on the list as being owed £1.4m.
In a statement, he said: "HVL is a great company with huge potential. People need to understand the circumstances of where it is now.
"For the first two years (2010 and 2011) HVL was an extremely profitable company making substantial profits against turnover.
"Due to huge interest overseas, I had to spend a substantial time away from the UK operations during 2012/13, while developing this interest abroad.
"The interest was from huge global companies and this interest remains in HVL to this day. During this time we invested heavily in new management, a business development team, technicians and field engineers.
"We more than doubled our manpower. I left the running and operation of the business to our new and existing staff as they had great experience. I have to trust these people or why did we employ them in the first place?
"Unfortunately the business development in the UK never matched the investment I put in. We saw a constant decline in turnover and a constant increase in costs. Still I supported HVL, but there is only so much an individual can do.
"Many people (including the staff unfortunately) fail to remember that I funded the business to the tune of approximately £50,000 per month over the last year or more.
"I have almost single-handedly covered the wages for all of this time. I have given HVL every opportunity to succeed. I don't know of anyone who would have continued to make the investment that I did without return and the business in decline."
Mr Foster said that in 2012-13 he worked very hard to secure a £1.06m Government grant, which was to be match-funded by the bank. But, he said, within days of being awarded the grant he was made aware that the bank no longer supported the match funding programme and they lost the grant.
He said another downfall for HVL was the acquisition of Denholm Pipecare, more than a year ago, which "turned out to be nothing short of a disaster".
At a creditors' meeting held last month, questions were raised about where all Hydra-Valve's assets had gone.
Following the meeting, Silke & Co told creditors the firm said "certain valuable assets" had been removed from company premises without the directors' consent. It said that assets had also been collected by finance companies, which were subject to agreements with Hydra-Valve.
In October, Mr Foster told The Derby Telegraph that the firm had achieved turnover in excess of £1m and was in the midst of a multi-million-pound investment programme which would see it take on 55 more workers.
Spondon ward city councillor Evonne Williams said: " It is sad we are losing another employer."
STATEMENT FROM FORMER DIRECTOR STEVE FOSTER
Steve Foster, former director of Hydra-Valve Ltd, said: "HVL is a great company with huge potential. People need to understand the circumstances of where it is now.
"For the first two years (2010,2011) HVL was an extremely profitable company making substantial profits against turnover. We had a very successful model and it worked.
"Due to huge interest overseas, I had to spend a substantial time away from the UK operations during 2012/13, while developing this interest abroad.
"The interest was from huge global companies and this interest remains in HVL to this day. During this time we invested heavily in new management, a business development team, technicians and field engineers. We more than doubled our manpower. I left the running and operation of the business to our new and existing staff as they had great experience. I have to trust these people or why did we employ them in the first place?
"Unfortunately the business development in the UK never matched the investment I put in. We saw a constant decline in turnover and a constant increase in costs. Still I supported HVL, but there is only so much an individual can do.
"Many people (including the staff unfortunately) fail to remember that I have continued to fund the business to the tune of approx £50,000 per month over the last year or more. I have almost single handedly covered the wages for all of this time. I have given HVL every opportunity to succeed. I don't know of anyone who would have continued to make the investment that I did without return and the business in decline.
"In 2012/13 I worked tremendously hard to secure a Government grant to the value of £1.06m. This guaranteed funding had to be match funded and our bank was very keen on Guaranteed funding from the Government. It took me 12 months for the whole process and many late nights but it was worth it. HVL also had to go through very strict due diligence for this grant so at this time it was obvious HVL was a very viable business. This due diligence was conducted by third party organisation supported by the Government funding legislation.
"Within days of being awarded the grant, (announced in Government, Westminster), I took the award to our bank to authorise. At this time I was made aware that our bank no longer supported the match funding program and I was basically on my own! As we couldn't, (didn't have time), to find another funder we lost the grant in full. This effectively cost HVL £2.12m in funding. This grant was a major part of our growth strategy as we had to go through several stages of securing the grant we were confident of the award. You don't need me to tell you what this meant to HVL. We certainly wouldn't be in this position.
"I have to say at this point that our local MP, (Pauline Latham), was a God send to HVL. Pauline tried so very hard to help me develop interest in HVL from many sources. Pauline took time out of her exceptionally busy schedule to help me and HVL. We made some great progress but time was not on our side. Effectively, this put HVL on the back-foot during 2013. Still I invested into HVL.
"HVL is not a Toyota, Nissan, Starbucks or Burger King, so it was hard for us to find interest at the right level to help. However these companies get great assistance due to their size and ability to employ and invest. Little emphasis is placed taxation. Small companies like HVL fund 80% of the UK's taxation revenue that allows the Government to help these huge monsters. You will see I don't include the great British organisation that is Rolls Royce of which I have the greatest respect and deserves all the help that the UK can give it. What a national treasure!
"HVL tried hard to stop the decline and I agreed to finance the acquisition of a larger company, Denholm Pipecare. This was a very hard decision as you can imagine at this time. The business averaged approximately £250,000 per month over the last five years. Before the acquisition we were informed that a large part of this turnover, approximately £100,000, per month was a contract that would unlikely continue. HVL budgeted this out of the acquisition but strongly felt that the remaining £150,000 per month was significant enough to support the development of HVL and the value of the acquisition. I found the investment and we made the deal.
"Since the acquisition, over a year ago, HVL has not benefited from any business from the Denholm Pipecare acquisition. HVL has seen very little if nothing in relative turnover. What we have seen is the huge increase in wages, overtime and all the other associated costs. The Denholm acquisition was seen as an ideal vehicle to move HVL on and increase our perception in the market place including added resource and services. What it turned out to be was nothing short of a disaster.
"HVL continues to be a tremendous opportunity. Finding the right people to work with us or believe in us was the difficulty. Everyone seemed to have a different agenda to the HVL plan of success.
"I stand by each article previously written in the Telegraph. HVL continues to gain huge interest from overseas companies. Not a week goes by where we don't receive enquiries from abroad. We just can't fund it.
"Numbers quoted in past news articles are a drop in the ocean compared to the reality of what we will do. We may now have to take an alternative approach and the only loser will be the UK, but I will continue to develop opportunities for HVL. Its not over!"
