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A Manchester-based technology company, valued at $800 million in 2021, has filed an 3rd notice of intention to enter administration. This follows notices filed at the end of May and in the middle of June.
Wejo is an innovative automotive data analytics company that made its name working with large companies and government agencies in the United States.
The latest notice to enter administration has sent further shockwaves through the North West business community, leaving around 275 employees uncertain.
But what does it mean? And what will happen next with Wejo?
What does a notice of intention to enter administration mean
A notice of intention to appoint an administrator is a legal step that signals a company is preparing to enter administration. It gives the company legal protection from creditors so they can move forward without the threat of creditor enforcement action.
Issuing the first notice marked Wejo’s transition from a company in financial distress to formally entering insolvency proceedings.
If the company is viable, then the notice of intention to enter administration can be the start of a turnaround strategy.
If the company is not viable, then the notice of intention signals the start of a winding down process.
Path forward not clear for Wejo
Without detailed financial information, knowing what will happen to Wejo, their employees, and creditors is difficult.
The company appeared to be struggling with finances – reporting losses of $159.3 million for 2022.
At the same time, the company has also managed to attract investment. Wejo secured an additional $15.9 million of funding in July 2022.
The company has recently sought financial lifelines from companies, including General Motors in the United States and Israeli auto-tech company Otonomo.
In the United States, Wejo has worked with public and private sector organisations, including Ford, General Motors, and various Departments of Transportation, and collected large amounts of data from tracked vehicles.
Administrators have been appointed by Wejo. They will carry out an independent assessment of Wejo’s finances and will explore different ways forward. Some options for a company in administration include:
- Company restructuring – Administrators typically pursue restructuring when they think the business could have a viable future, but needs to be restructured to get rid of debts or unprofitable parts. Restructuring aims to ensure the company’s survival or at least part of the business.
- Sale of the business or assets – In some circumstances, administrators may look for a buyer for the business or some of its assets. Administrators will use the money raised from this kind of sale to pay company creditors. In some cases, the business may be sold as a ‘going concern’, which means it can continue trading under new owners.
- Liquidation – If administrators decide that the company isn’t viable, they may choose to liquidate it. This involves selling all the company’s assets to pay off its creditors. Once this process is complete, the company is dissolved.
Whatever happens with Wejo, company employees and creditors will be kept informed of developments.
Tom Fox, Licensed Insolvency Practitioner at Umbrella Insolvency, said: “The news about Wejo will be hard for employees and other people connected to the business to take. It has also sent tremors through the Manchester business community and will be particularly tough for any North West businesses that counted Wejo as a major client.
“The administration process is always run in the best interests of creditors and employees, and we sincerely hope that administration doesn’t affect the technology sector and broader business community in Manchester.”
For more information about administrations and company insolvencies, speak to a member of our expert trusted team today. Call: 0800 611 8888.