Swansea Medtech Firm Calon Cardio-Technology Enters Liquidation with Multi-Million Pound Debts
Swansea medical technology company Calon Cardio-Technology is now being liquidated, leaving creditors owed more than £5 million. The firm, which was a spin-out from Swansea University, had developed an innovative implantable heart pump designed for patients suffering from severe heart failure.
Creditors and Financial Backers Face Significant Losses
The Development Bank of Wales, along with its predecessor Finance Wales, invested a total of £3.5 million into the business through a combination of debt and equity. However, the bank's stake had been diluted to less than 10% by the time the company entered administration last summer. Other major creditors include Swansea Council, HMRC, and law firm Pinsent Masons.
Gareth Stones, the administrator from Swansea-based insolvency firm Stones & Co, has informed creditors that the administration process has proven unsuccessful. He stated that the proper course of action is now to place the company into liquidation. The latest statement of affairs estimates a total deficit to creditors of £5.4 million, with non-preferential and unsecured creditors not expected to receive any returns from the liquidation of assets.
Founders and University Connections
The founders of Calon Cardio-Technology included Professor Stephen Westaby and Prof Marc Clement, who was dismissed from his role as dean of Swansea University’s School of Management in 2019 due to gross misconduct. Prof Clement had served as chairman of the medtech firm and remained optimistic about its commercial potential as recently as 2023, predicting the creation of 100 high-skilled jobs in Swansea.
Despite initial optimism and a non-binding agreement for a £39 million acquisition by AIM-listed special purpose acquisition company Ashington Innovation, the deal fell through. The reverse takeover was conditional on Ashington acquiring another company called Cell Therapy, but the planned acquisitions never materialised.
Employee and Shareholder Impact
The company employed 17 people, and substantial amounts are owed to them in respect of outstanding holiday pay and wages. An estimated £21,000 is available for preferential creditors, with former employees being the first claim. Shareholders, including the UK Government through its £1.1 billion Future Fund, which holds a stake of just over 6%, are not expected to recover any investments.
Prior to entering administration, the company had been locked out of its premises in Swansea after the landlord served a forfeiture notice. Efforts to secure investment or arrange a company voluntary arrangement with creditors ultimately failed.
Administrator's Comments and Future Prospects
Mr Stones highlighted challenges during the administration process, including issues with a potential lender who attempted to transfer $2.6 million into the company’s HSBC account. The potential lender's solicitors were averse to funding a company voluntary arrangement via administration, leading to a shift in focus towards selling the company’s intellectual property rights and tangible assets.
There are now potentially three other interested parties who may be prepared to formulate an offer for the company’s remaining IP rights and assets. Mr Stones noted that such leads would be best pursued by a liquidator, and it is proposed that he be appointed to liquidate the business.
A spokesperson for the Development Bank of Wales commented that the majority of their investment came from the EU-backed JEREMIE Fund and that they anticipate a return on their secured debt following the liquidation process. The bank has not made any material investments in the company since 2018.
