The owner of Britishvolt has blamed a tax raid, critical media coverage and “intentional sabotage” by employees for the near collapse of his global businesses, as he faces down legal action from staff demanding months of back pay.
David Collard’s Recharge Industries was selected by accountants EY to buy the defunct UK battery start-up earlier this year, though it has yet to pay the full sum for the company or buy the land for a potential factory in Blyth, Northumberland.
The Britishvolt deal propelled the Australian entrepreneur — who had no battery manufacturing experience — into a leading position in the UK’s ambitions to foster a homegrown battery industry.
But in the months since, the enterprise has unravelled.
More than a dozen current or former employees of Recharge, its owner Scale Facilitation and business associates of Collard from the UK, New York and Australia have told the Financial Times that repeated promises of investment never materialised.
Collard has also been named in lawsuits in New York from staff demanding back pay, as well as an eviction notice from a luxury apartment, and an American Express bill for $746,000.
This week, one former Britishvolt employee filed a “statutory demand” against Recharge for back pay that could lead to the business being wound up within weeks if it does not clear the debt.
Collard told the FT that the negative views of former staff “represent a fraction of the overall employee sentiment”.
He stressed that financing for Britishvolt had been “meticulously planned”, but had run into difficulty after Australian tax authorities raided another of his businesses, SaniteX, in June.
He said that “media coverage” of the raid “linked it to the Britishvolt transaction”, which had “not only derailed our financial planning but also left us in a precarious position for raising capital and debt”.
Nevertheless, he added: “We are securing a strategic financing pathway to navigate the aftermath of these events in the upcoming days.”
According to a lawsuit filed in New York and former staff, Collard frequently promised that investment was about to appear, although it never did.
For months, Collard’s enterprises, which include Recharge and its parent Scale Facilitation, were using funds from an earlier coronavirus pandemic venture.
SaniteX, which he set up in early 2020, made tens of millions of dollars selling Australian-produced sanitiser to local authorities. This windfall allowed Collard to bankroll an apartment in New York and an office in the One World Trade Center building, according to three people.
Collard said the apartment was “the primary place of business . . . along with my residence” before the company moved into the One World Trade Center building. He said the business had always planned to leave the apartment, but defaulted on its rent due to the “financial disruption” over the summer.
Initially, staff at Scale Facilitation were wowed by its office — an entire floor of One World Trade Center — leading workers to ask whether the space was too much for a business that had just 150 worldwide employees. “You could have played cricket in it,” said one.
Coming only months after Scale began work on a potential Australian battery plant, the January decision to bid for Britishvolt, which had collapsed after running out of funds and needed a deep-pocketed investor, took staff by surprise.
“It was a madman’s call, we obviously didn’t have the money,” said one former senior employee.
EY ran the sales process faster than is usual, meaning less time for other investors to carry out due diligence into the collapsed battery start-up, according to three people with direct knowledge of the matter. The accountants had already been criticised for its deep involvement with Britishvolt, before further profiting from its collapse by overseeing its administration.
Recharge was selected as the buyer after Collard offered a “personal guarantee” to EY that he had funds, three people said.
A report from EY published in March said the decision to run an accelerated process was “driven by a combination of factors” including limited cash, the risks that remaining staff would leave and the need to raise money to make “critical payments in short order”.
A separate due diligence report by UK accountants Grant Thornton into Collard and his businesses, for Northumberland county council in the weeks following EY’s rapid selection, raised multiple “red flags” over Collard, his businesses and his ability to raise financing, according to five people with knowledge of the report.
These concerns raised by Grant Thornton were either missed or ignored by EY when handing him the reins to the UK business, the people said. Grant Thornton declined to comment and the Northumberland county council did not respond to a request for comment.
EY, which has said it “ran a thorough and competitive sales process”, declined to comment on the Grant Thornton report.
One person involved in the Britishvolt administration process said that Collard was charismatic but ultimately, “he’s never been able to demonstrate that he has the money”.
The decision to pursue Britishvolt used up much of the remainder of the SaniteX windfall, according to several people. Shortly after, some staff across the businesses stopped receiving wages, something the company initially blamed on a faulty payroll system.
As reserves dwindled, the company prioritised paying UK wages ahead of others, because of the importance of Britishvolt, while also deliberately delaying payments to staff in Australia because of the leak to the media over the tax raid, according to three people.
Collard said: “I understand the concerns and frustrations and have been transparent with the team, especially at the beginning, though leaks and disruptive media coverage forced a shift to a ‘need-to-know’ basis to protect the employees and the organisation.”
He added that “there have been cases of intentional sabotage that have not only affected the company but all employees that are being investigated and will be addressed by the corresponding legal entities”.
At this time, Scale deployed several methods to try and bring short-term relief to its finances, according to current and former staff.
One measure involved reclaiming VAT immediately, a legal practice. However, two former employees said some claims were filed even though the invoices had not been paid.
Collard said that VAT filings were handled “by a third-party compliance firm” and that “a full audit (by the authorities) of original filing revealed no issues”.
Despite the legal claims, and allegations by staff that the businesses are insolvent, Collard insisted he remains convinced the companies have a future: “The recent impact on our efforts is disheartening, but the resolve to reconstruct this vision remains steadfast.”
Additional reporting by Harry Dempsey in Singapore and Nic Fildes in Sydney
