David Fairfull, founder of adtech startup Metigy, which filed for bankruptcy in July just 20 months after raising $20 million in a Series B, has been declared bankrupt as regulator ASIC takes a closer look at the company’s possible insolvency trading.
AdNews reports that Fairfull has gone bankrupt this month – its second bankruptcy after a first spanning 2006-2009.
Simon Cathro and Andrew Blundell of Cathro & Partners were appointed in September as liquidators of the three Australian companies within the Metigy Group and are working with ASIC on their investigations.
The company has debts of more than $32.366 million and the liquidators have turned to the government-backed Fair Entitlements Guarantee Scheme as a last resort to pay about $1.3 million in workers’ rights to date.
About 75 lost their jobs when Metigy collapsed.
Metigy was founded in 2015 by former We Are Social managing partner David Fairfull and Johnson Lin, who claimed to give small businesses access to the same data and strategic insights as leading marketing teams.
But a report prepared by the liquidators says that: “Metigy appears to have generated no revenue since its inception.”
It also appears that the company has not filed any statements of operations, prepared any formal financial statements, or filed any tax returns.
Cathro & Partners’ report to creditors states: “Our investigations to date indicate that the Metigy Group has never achieved a cash flow positive trading position”.
Metigy has raised a total of $27.1 million since inception, including $20 million in a November 2020 Series B round led by Cygnet Capital. The other lenders included Regal Funds Management, OC Funds, Five V Venture Capital and Thorney.
The company reportedly did not raise funds again for a $1 billion valuation until May of this year.
And research into Metigy’s books has revealed that Fairfull took out a $7.7 million loan from the company to buy two properties – one worth $10.5 million in the exclusive Northern Beaches suburb of Mosman; and another worth $7.7 million in the Southern Highlands in Kangaroo Valley.
“During the year leading up to our appointment, Metigy raised capital in excess of $20 million from various investors, which appears to have been used to meet the day-to-day trading needs of the group entities and a loan to the director used to purchase personal property” says the Cathro & Partners report to creditors.
The liquidators will sell both properties in early December, but AdNews reports that liquidator Andrew Blundell told a meeting of creditors this week that they were bought at the high end of the market and the sale price realized may be less than what was paid for them.
The two properties had combined mortgages of $12.74 million, leaving only $3.76 million in potential home equity.
AdNews reports that the liquidators have written to the mortgagee several times, but have not received details of the costs incurred or the expected realization amounts.
Chris Pash’s AdNews story does here.