WASTE to energy business Bioflame is holding discussions with creditors on Friday before going into liquidation.

The Pickering-based business has made its 38 staff redundant and ceased trading after its funder decided not to continue backing it.

Victor Buchanon, managing director, said the directors were in the process of winding up the company.

Bioflame has four plants, including one at its base in Pickering. Mr Buchanon said that one, owned by a Doncaster company, would continue to be run by that company.

But he had “no idea” what would happen to the rest of the sites or half-built sites.

Its small plants, situated at existing recycling facilities, burn biomass materials, such as waste wood to generate green electricity and heat.

Bioflame went to the market for funding last year, securing a deal with a renewable energy fund, ESB Novusmodus LP, for an investment of an inital £3 million with the option of investing a further £1.5 million.

Bioflame secured the investment in December 2010 to complete the commercialisation of the company’s technology, attract project funding and accelerate the rollout of projects.

But the fund decided not to invest the further £1.5 million, believing the business would require more than this sum to get the technology up and running.

Mr Buchanan said the business plan and project development side of the business were successful, but the business could not continue without cash.

He said: “It’s hugely disappointing and is just a disaster really.”

He said Bioflame had been a profitable business until it embarked on the expansion with the investment, and it had then grown too quickly.

Tom Rayner, of Novusmodus, said: “The company has been seeking further investment, which unfortunately it was unable to find.

“The situation is regrettable, but we understand and support the management's decision.”