IOUPay fails to secure funding, enters voluntary administration

After a tumultuous year replete with lawsuits, declines and deal fallouts, digital payments company IOUPay (ASX: IOU) has entered voluntary administration. Daniel Walley and Philip Carter of PricewaterhouseCoopers Australia have been tasked with putting on the cape and saving the Company from their burning building. 

This action has been taken as IOUPay has many outstanding debts that are due and payable and has no reasonable prospect of being able to pay them under the current circumstances.

Recently, IOUPay’s broker Clee Capital lodged legal filings against  the Company with the help of its former CFO accused of misappropriating funds. IOUPay won the initial ruling seeing as there was no evidence against it. Still, Clee Capital seems to have gotten what it wanted in a way, as the Company failed to raise capital and enter loan agreements, and it has had to bring on administrators.

As soon as the suspected significant fraud affecting the Company’s Malaysian office was discovered, the Board took immediate action to reduce costs wherever feasible. Additionally, they have been working on a plan to ensure a favourable outcome for both creditors and shareholders. As part of this plan, the Board has engaged with several potential investors in Australia and Malaysia. However, due to the significant uncertainties affecting the Company, securing funding or a reasonable expectation of it in the near future has not been feasible.

The Company did receive a funding proposal from a non-bank funder Finran—an attractive one at that—but once the Board accepted the proposal, Finran withdrew it.

As insolvency professionals who work independently, the Administrators will take over the management of the Company and its affairs from the Directors. They will be responsible for assessing all proposals that could benefit the creditors and shareholders. Additionally, the administrators will examine recent events and investigate any claims of fraud related to the Company or its subsidiaries. The Directors support this review and will fully cooperate with the Administrators.

The administrators were appointed solely to the parent Company, IOUpay Limited. The operating subsidiaries of the Company in Malaysia, iSentric Sdn Bhd and IOUPay (Asia) Sdn Bhd, are operating as usual, and there will be little to no disruption to their business operations. The Board believes that given the Company’s asset value, this independent administration process is the best way to ensure that the creditors and shareholders receive a favourable return.

The appointment of voluntary administrators will impact the upcoming general meeting scheduled for May 3, 2023. Shareholders will not be able to appoint or remove directors without the approval of the Administrators. The Board anticipates that the administrators will make a separate announcement regarding whether the general meeting will continue as planned.