BY ADAM ATKINSON
North Country This Week

POTSDAM — Innovative electric motor manufacturing and development company LC Drives will be dissolving, according to a memorandum circulated to employees Thursday (Sept. 23).

The memo, which was anonymously supplied to North Country This Week from multiple LC Drives employees, was written by company CEO Russell Marvin and states that an investor the company was courting had pulled out of negotiations.

Among the concerns raised by the employees aside from the company dissolving was that paid time off they estimated as between $700,000 and $1 million was not being paid out.

“Unfortunately, I write to you with a heavy heart. The investor that was formulating an offer on Friday has chosen not to invest due to internal reasons; something entirely out of our control and ability to affect,” Marvin writes in the memo. “At this point I do not believe that there will be an investor that will bring LC Drives back - at least not one that will allow it to be the current size and scale.”

LC Drives, which operates from the Shipley Center for Innovation, a business incubator run by Clarkson University in downtown Potsdam, and a location in Ballston Spa, had furloughed its employees on Aug. 30 stating that the lay off would give the company time to secure financing for its series B funding round. The international corporation Koch Engineering Solutions funded the company initially at $15 million in 2019 for its series A round. LC Drives did employ about 100 people between its Potsdam and Ballston Spa locations.

“We did great things at LC Drives and have a near commercial ready product that would revolutionize the large electric motor business. I am as perplexed as you are as to why decisions were made that put us in this situation. I am sorry,” Marvin wrote. “I will continue to work to find options for a path to bring a subset of employees back, but everybody should be actively pursuing other options. Feel free to remove your personal items and leave any LC Drives property/keys on your desk/workspace.”

The memorandum continues:

“There have been a lot of questions regarding healthcare. As of September 30th, the healthcare plan at LC Drives will be terminated and everybody will need to seek other options. The same is true regarding the dental plan. Because the healthcare plan will not exist anymore, COBRA is not an option for anyone. Everybody will be able to get coverage at https://nystateofhealth.ny.gov/. I have spent some time this week trying to understand the rules - and have spoken to 5 people on their support line until I was able to get many of my questions answered consistently. Contrary to what some of them said - you will be eligible for coverage starting 10/1/2021 because of the loss of coverage at LC Drives. I have included a separate letter of tips/tricks I figured out on their website that may be helpful to you.

“With the dissolution of the company, the ownership will revert to Koch. For answers on outstanding PTO and other matters, you should contact them," Marvin writes in the memo.

“With respect to your 401k – all of your money is safe and all of the company match is vested. I will be forwarding information from our provider shortly that will provide you your options for what to do with your money.

“More than 100 of us are out there in a similar position on the job search front. As a group, let’s continue to network with each other to ensure that every member of the team lands in a good place. Our teamwork is how we got as far as we did in such a short period of time. Let’s make one final push together. Joe has attached a note where he is willing to help. Clarkson has also offered to help.

“I don't expect to continue sending out updates unless something changes. Good luck to all and feel free to reach out if you have any issues/questions.”

Requests for direct comment from Marvin by both email and phone were not answered at the time of this writing.

However a Koch spokesperson called Marvin’s description of the company taking over L.C. Drives a mischaracterization.

“Koch Industries is not now, and has never been in control of LC Drives Corp. Koch Engineered Solutions, LLC (“Koch”), a subsidiary of Koch Industries, Inc., is a passive minority investor in LC Drives and is also a creditor of the company,” Rob Carlton, director of Communications & Marketing, Koch Communications Marketing, told North Country This Week in an email.

“Koch is not entitled to, nor does it plan to, take control of LC Drives. Accordingly, Koch is not responsible for obligations that LC Drives may have with respect to its current and former employees. Mr. Marvin, quoted in the article through his memo, does not speak for or represent Koch in any capacity,” Carlton said.

“It is our understanding that LC Drives is headed toward an orderly wind down and potential bankruptcy. Koch is supportive of this decision and may take certain steps to protect collateral that secures the credit extended to the Company in the past,” Carlton told North Country This Week.