Hundreds of UK-based employees at Builder.ai, once hailed as a £1bn tech unicorn, have been left without pay or redundancy compensation following the company’s dramatic collapse into bankruptcy in May. The situation has left workers in limbo, unable to access statutory redundancy payments due to stalled insolvency proceedings in the UK.
Builder.ai’s collapse, after raising nearly £450 million in funding and achieving unicorn status, has sent shockwaves through the UK tech sector.
Bankrupty shock for AI workers
Although backed by global investors including Microsoft and the Qatar Investment Authority, filed for bankruptcy in the US in May after months of financial turmoil and allegations of inflated sales reporting. The company has yet to appoint administrators in Britain, where the majority of its workforce was based, preventing staff from claiming government-backed redundancy payments.
One engineer at Builder.ai described the moment the news broke:
“It’s hard to believe how a company can go from over 1,000 employees to zero. Yesterday started as a normal day and by the end of it, we found out Builder.ai had filed for bankruptcy. Everything changed in an instant.”
Because Builder.ai has not formally appointed administrators in the UK, around 200 British staff cannot claim redundancy pay from the Insolvency Service. Normally, a case number provided by restructuring advisers is required for such claims, but the lack of formal administration has left employees without recourse.
A spokesperson for Builder.ai acknowledged the situation, stating the company was “aware of the frustration” of staff and that investors and creditors were in advanced talks over a potential pre-pack administration, which could see remaining assets and technology sold.
The company’s demise followed revelations of overstated revenues and mounting debts, including $85 million owed to Amazon and $30 million to Microsoft.
New CEO Manpreet Ratia reportedly told staff he had been attempting to run the company with “zero dollars” in its UK and US bank accounts in the days leading up to the bankruptcy filing.
.As one former employee summed up the mood: “Still in shock at the turn of events.”
False AI system leads to downfall
For eight years, Builder.ai promoted its “Natasha” AI system as a completely self-sufficient tool that could create software “as simply as ordering a pizza.” Nevertheless, internal records and employee testimonies examined by Bloomberg reveal a starkly contrasting reality. Engineers in Noida and Bangalore were engaged in manually coding client projects while being directed to imitate AI-generated outputs.
“We were told to never mention our location or use Indian English phrases,” said a former Bangalore engineer.
The team timed updates to UK business hours to maintain the illusion of automation.
The company’s decline sped up in April 2025 when Bloomberg revealed a round-tripping operation involving Indian social media company VerSe Innovation. Between 2021 and 2024, both firms exchanged nearly identical invoices amounting to millions for services that were never provided, which artificially boosted Builder.ai’s revenue by as much as 300 percent. Subsequent audits disclosed that 2024 revenues were only $55 million – a small fraction of the $220 million that had been projected to investors.
The collaboration with Amazon disintegrated when creditor Viola Credit confiscated $37 million from Builder.ai’s accounts after discovering inflated financial statements, leaving a mere $5 million in restricted assets. Additionally, the startup has debts of $85 million to Amazon and $30 million to Microsoft for cloud services.
Microsoft’s $455 million investment in 2023, which included intentions to merge Builder.ai’s technology with Azure, now serves as a cautionary example.
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