NEARLY £200,000 of public money pumped into a doomed carpet manufacturer may never be recovered, it emerged last night.
Regional development agency One NorthEast announced a £245,000 Selected Finance for Investment (SFI) grant for Hugh Mackay, in Durham, early last month, with a promise it would create 120 jobs.
Less than two weeks later, the carpet maker went into administration and 100 of its 138 workers were sacked.
By then, One NorthEast had already handed over £195,000 and is unlikely to be able to recover the money.
Administrators at Ernst and Young said they could not comment in detail on an individual creditor.
However, a spokeswoman confirmed that One NorthEast is an unsecured creditor.
This places it behind secured creditors waiting to claim money realised from the sale of the business or its assets.
David Allison, One NorthEast director of business and industry, said: "The company did receive an SFI offer of £245,000 to help safeguard jobs and keep the time-honoured skills of carpet design and manufacture in Durham.
"One NorthEast will initiate clawback procedures as £195,000 has been paid against the offer."
The agency said it was still in negotiations with administrators and declined to comment further.
Ernst and Young is hoping to sell plant machinery and intellectual property, which could include the Hugh Mackay brand name
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