Funding problems at Havelock were discussed five months before the company’s overnight collapse led to 247 workers being thrown on the dole.
The background to the demise of one of Kirkcaldy’s major employers was fleshed out in more detail in a letter to Lesley Laird MP from Jamie Hepburn,MSP, the Scottish Government’s Minister for Business.
And she says it leads to more questions about how much was done to try to save the firm.
Ms Laird says it demonstrated Scottish Enterprise knew about Havelock’s financial problems in Spring – and that was when it should have acted.
She was also critical of RCapital, owners of Havelock, for “not playing ball” with the agency – and said talk of the Scottish Government doing everything possible was “premature.”
Ms Laird said: “An earlier intervention may have ensured loyal and long serving staff were treated with respect and decency. They should have been paid the wages and redundancy they were entitled to – not left adrift and out of pocket following an overnight collapse.”
Havelock’s swift demise came at the start of August with staff summoned to a mass meeting and then given the grim news their jobs were lost, despite workers insisting they had a full order book.
Since the doors closed, calls have been made for a parliamentary inquiry, while trade union, GMB, is pursuing claims on behalf of workers through the Government’s compensation scheme.
Ms Laird this week released the latest correspondence from the Scottish Government Minister in response to her questions.
You may also be interested in:
It shows that RCapital asked Scottish Enterprise for funding in March - a request that was turned down.
The agency said there was no guarantee the money would meet the needs of the business, but it offered support and agreed to look into the possibility of buying the factory at Mitchelston Industrial Estate.
RCapital did bridge the funding gap to ease the immediate crisis, and, according to the Minister, no concerns were raised until July 26 – just days before the company collapsed.
The Minister said that from April to July RCapital didn’t flag up financial problems, despite on-going engagement with the enterprise agency.
By July 24, the situation had become critical with RCapital seeking urgent finance to meet the payroll deadline. It also revealed the company had been put up for sale on July 19.
Added the Minister: “The notification to Scottish Enterprise on July 24 was the first indication of this situation”
He said a timescale of just 48 hours made it impossible to consider any funding proposal, and Havelock collapsed.
He said the tight timescale also thwarted attempts to ensure all staff got paid before the administrators moved in.
The town’s MP said the correspondence “proved Scottish Enterprise was aware of Havelock’s financial difficulties back in March/April.”
Ms Laird added: “RCapital didn’t just alert SE to a ‘potential’ working capital issue which could require financial assistance from SE, as previously stated. it submitted a funding request and it was refused.
“Scottish Enterprise’s reasons for refusal – that the risk was too great – also demonstrates that it believed the company was vulnerable and potentially unviable.
“For it to say it was unaware of Havelock’s difficulties until just days before it collapsed is disingenuous, especially when the Minister himself now says otherwise.
“What would have been clearer at the outset is an admission that, having already invested £3m in Havelock before it was sold to RCapital, the Scottish Government was reluctant to commit major funding again just nine months later.
“Scottish Enterprise say that if Rcapital had come to them again before July 25 seeking urgent help, the outcome may have been different – but the time to act was in April.
“The question is, knowing Havelock was in difficulty, how closely did Scottish Enterprise work with RCapital? Did it ask if they were ever likely to go bust?”