An observer close to a situation that saw 21 Fluxome employees at its Danish premise dismissed last Thursday without prior notice and pay for the month of September, said rash spending on new hires and premise expansion drove the company into the ground.
“While the company was struggling financially, they go and hire a new CEO, sales director [based in the US] and open offices in Maryland in the US – it’s just gross mismanagement,” the observer said.
“They knew they needed a new investor so it was just a bluff to get interest in the company.”
But chairman Jarne Elleholm said the company had filed for “formal reconstruction” in Danish courts last week almost exclusively as a result of the last-minute pull-out of an investor that would have driven the company’s ambitious omega-3 yeast extraction programme forward.
That programme was run by Dr Birgitte Wittschieben out of the now closed premise in Denmark. Its US operation continues to function.
“There was a party ready to invest but everything changed overnight when they pulled out at the last minute,” said Elleholm.
He said the new “formal reconstruction” procedure in Danish law offered a better means to take the company forward than filing for bankruptcy. That motion is set to be heard in Danish courts on October 22.
He said he did not know if the 21 staff would eventually be paid – “it depends on the court”.
The “formal reconstruction” law gives companies more time to deal with financial problems, and de-prioritises the payment of salaries, unlike bankruptcy laws.
Board member Isabelle de Cremoux, from Paris-based investment firm, Seventure, said the firm was involved in restructuring plans.
“We were in late stage discussions with another investor with whom we, the current venture capital shareholders, were considering refinancing.”
“But he suddenly dropped out, hence the situation. If we find a new co-investor, we are likely to participate to the refinancing.”
Elleholm said 3-4 investors were in the picture for such refinancing.