Receiver of Moola’s parent company expects sale of assets this month

Moola is in liquidation and its parent company is hoping to sell the assets to pay off its debt.

The receiver of NZ Fintech Group Holdings - parent company of online lender Moola - expects a sale of the assets of the business to be completed in February and is waiting to see if they will be enough to pay back the money owed to Partners for Growth V - a US venture capital firm which provides debt financing.

Partners for Growth V called in receiver Thomas Lee Rodewald in December last year to take over NZ Fintech Group Holdings, NZ Fintech Group and NZ Fintech Solutions after it established that “major financial issues existed”, according to the first report issued by the receivers on Friday.

At the same time liquidators Steven Khov and Kieran Jones were appointed to 10 subsidiary companies including Moola.co.nz - a Christchurch-based lender - to enable independent control to be put in place.

Christchurch-based NZ Fintech Group Holdings is owned by Edward Recordon.

In October 2021 Recordon told the Herald it had raised $50m in institutional funding through Partners for Growth and Australia’s Alceon and was looking for a further $20 to $30m from both wholesale New Zealand investors and local institutions to top up the funding round and expand into the vehicle financing market.

When the receivers were appointed in December Recordon said the company’s situation was due to an equity deal falling over at a late stage.

“The company was expecting a large equity deal to settle in September which did not end up completing at the last minute.”

Recordon also said the last three years had also been very challenging.

“Seeing the rise of the unregulated BNPL [buy now pay later] players taking considerable market share; regulatory changes for short-term lenders and Covid and the economic backdrop made execution on business plans very difficult as a result.”

Recordon said there were some “fantastic assets and business plans in the pipeline” and he was “working closely with the receiver and liquidators to achieve the best outcome possible given the circumstances”.

But Recordon himself could be held liable if the asset sale is not enough to satisfy the general security agreement which Partners for Growth has over his businesses.

Receiver Rodewald said in his report that he had established that Recordon had an insurance policy in place to protect his own position.

“We are currently working with our legal advisers to ensure this policy remains in force.”

Rodewold said he awaited confirmation from the liquidators as to the possibility they will realise sufficient assets to repay Partners for Growth in full.

“Once the position is established consideration will be given to having the three entities in receivership placed into liquidation and/or investigate the possibility of commencing legal action against the director of the companies and the possibility of a recovery from the insurance policy in place.

“At this point in time no estimate can be provided as to a likely recovery.”

As well as the money owed to Partners for Growth unsecured creditor claims had been lodged by PriceWaterhouseCoopers, Elantis Premium Funding and Brothers International NZ totaling just over $194,000.

There were also 28 investors of which 27 had advanced funds to NZ Fintech Group with one investor lending directly to Moola.

Rodewold also noted in his report that it was not practicable to estimate the completion of the receivership or if there will be any distribution at this stage.