Court closes administration of UK paytech Goodbox, rules in favour of restructuring
Goodbox, a UK-based payments company that focused on the automation of the charitable donations sector, has had its administration closed by a Leeds High Court decision, ruling in favour of a proposed restructuring package.
Founded in 2016, Goodbox allowed charitable donations to be made with the swipe or tap of a payment card. The company worked with many well-known charities and museums and received multiple accolades for its payment device hardware, including the Paytech for Good award at the PayTech Awards in 2018.
It had 2,200 not-for-profit clients including the Natural History Museum, the Science Museum, The Church of England, and British Red Cross. Its clients have collectively raised nearly £20 million using the Goodbox tech, with more than 3.2 million donations processed.
In autumn 2019, it raised £1 million in a crowdfunding round on Seedrs, adding to its combined £1.3 million Series A investment earlier that year.
However, Goodbox was unable to make a profit. Also, like much of the charitable sector, it was hit hard by the Covid pandemic.
In early 2021, it raised £9 million in a convertible loan deal through the UK government scheme, Future Fund, but its financial troubles continued. In June 2022, the business became insolvent and Frost and Wadsted were appointed as joint administrators – and “it’s been a tumultuous time for the UK fintech brand” since then, the administrators say.
Frost says the two firms “have pursued multiple avenues in their attempts to save the brand’s future whilst protecting the various charities, religious organisations and museums reliant on the company’s services for their donations”.
Frost adds: “In this element at least the joint administrators are justly proud of their achievements as over £4.5 million of donations have been processed in the course of their appointment.”
The original purpose of this administration was to save Goodbox, Frost claims, but the court judgement has now formally brought the administration to a close. The decision “was certainly a surprise” to the administrators, Frost adds.
NGI Systems, Goodbox’s technology vendor, led by Tibor Barna (who is also co-founder and chief technology officer of Goodbox), proposed a US-style Chapter 11 restructuring of the company. The court ruled in favour of the rescue package.
The proposed restructuring – the Part 26A Restructuring Plan – details independent scheme administrators, 20 angel investors and the appointment of a new and independent board of directors to get the paytech back on its feet.
It is understood to be the first of its kind ruling outside of London, and will see Goodbox’s debt of more than £10 million slashed by more than 90%.
It is also expected to save £4.5 million of taxpayer investment. British Business Bank, which operates on behalf of the government and provided the funding, will retain equity in the company and a share of future revenue.
The latest hearing at the Leeds High Court followed a vote by existing shareholders and creditors, with more than 90% voting in favour of the rescue plan. Peculiarly, British Business Bank voted against it, even though the alternative – the sale of assets – would have wiped out all creditors and shareholders of Goodbox, meaning the UK taxpayer would have received nothing.
The administrators opposed the rescue package (they did the same in previous hearings), and also submitted a separate application to sell the business. The court dismissed the application and ordered the administrators to pay the legal costs of NGI Systems in the matter.
“We are pleased that the court has again ruled in our favour, confirming our belief that the rescue plan backed by 20 new investors is the best route forward for the company and its clients, under the control of the new independent board of directors,” Barna states.
“It was disappointing that the Future Fund, via its director Luis Martin, acted in a manner that represented neither the interest of the taxpayer nor the mission and mandate of the Future Fund, which was to support the companies they invested in to save them from collapse during Covid.”
The angel investors will now become majority owners of Goodbox. NGI Systems will be a minority shareholder and act as a facilitator.
TipTap, a Canada-based donation and micropayment solutions provider, will be refinancing Goodbox with £1.5 million. Also, as part of the agreement between the two firms, TipTap will bring its product to the UK while Goodbox will enter the North American market.
There are also merger talks between Goodbox and online charity shop GiveAsYouLive. Both organisations are now backed by Geoff Squire, a UK IT industry veteran who is best known for bringing tech giant Oracle to the UK.