Tuesday, August 9, 2022

Logistics software startup GetSwift is dead in Australia, on life support in the US

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Former ASX publicly traded logistics technology company GetSwift has put its Australian arm in the hands of liquidators, while its publicly traded parent company, GetSwift Technologies, has been suspended from the Canadian NEO Exchange after filing for Chapter 11 bankruptcy protection in the US.

The company’s Australian subsidiary, GetSwift Ltd, was liquidated on July 29 with KordaMentha’s Kate Conneely and Rahul Goyal as liquidators.

KordaMentha did not respond to a request for comment.

On Monday, the New York-based parent company — the company relocated to North America in early 2021 after it ran into trouble from Australian regulators — filed Subchapter V under Chapter 11 in New York, stating that assets and liabilities are between $ 1 million and $10 million.

Subchapter V was introduced in early 2020 as a faster, easier, and cheaper version of Chapter 11 bankruptcy for small businesses to restructure.

GetSwift has announced plans to sell its software assets to US real estate fund Stage Equity Partners in May for $10 million (A$14.2 million) before filing for Chapter 11 protection on Aug. 2. for the company’s SaaS assets in an auction.

GetSwift emerged in 2015 from former AFL footballer Joel McDonald’s alcohol delivery start-up Liquorun. Within a year, it was trading on the ASX for 20 cents a share, raising $5 million.

Within two years, its actions would lead to the ASX tightening its market intelligence requirements in 2018.

But during that time, GetSwift quickly became one of the country’s hottest tech stocks, thanks to a series of deal announcements with major companies such as Amazon, Commonwealth Bank and Yum Brands.

After raising $24 million in June 2017, GetSwift shares rose 800% to $4.30 within six months amid a vigorous PR-driven series of alleged client wins, and the company raised $75 million from investors against $4 a share.

Within two months, the stock price plummeted to 70 cents amid growing questions about the truth behind GetSwift’s deals.

In the wake of the disclosures, a shareholder class action was launched in 2018. This was settled for $1.5 million.

Deceptive and deceptive behavior

Like a damning 868 pages Federal court ruling in November 2021 then, following a case filed by corporate agent ASIC, concluded the company, McDonald and fellow CEO Bane Hunter, was involved in misleading and deceptive conduct.

Judge Michael Lee found “what can be described as a public relations-driven approach to disclosure by companies on behalf of those in power within the company, motivated by a desire to regularly announce successful agreements with a number of national and multinational corporations.” entered into.” corporate clients.”

Those customers were only trying out the GetSwift platform, or considering a trial, and the deals, when announced, were neither underway nor monetising. The Australian Securities and Investments Commission has taken legal action.

One involved CBA, the other Amazon, and the court has been informed that legal representatives of both companies are advising against the planned market announcements. The CBA’s announcement was said to be worth $9 billion, but that was based on five years when the contract was for two.

The ASX suspended GetSwift shares after Amazon’s announcement because it was too vague. Amazon has reportedly banned any announcement as a condition of the deal.

The court ruled that the announcements were misleading and that the company had breached its ongoing disclosure obligations.

Hunter was “deliberately involved” in 16 of the 22 ongoing disclosure violations and 29 instances of misleading and deceptive conduct. For Macdonald, it was 20 out of 22 and 33 cases of misleading and deceptive behavior. Both men have violated their director’s duties.

By this time, GetSwift had already left for Canada and was removed from the ASX in January 2021. It listed on the NEO Exchange that same month after receiving federal court approval despite opposition from ASIC.

The approval was conditional on the company covering Australian legal costs and fines.

Hunter and McDonald appealed the Court’s ruling in the ASIC case, but withdrew it in May.

Sanctions in the ASIC case are yet to be determined and the case will return to court after the appeal is withdrawn.

ASIC is seeking a $15 million fine and a 12-year suspension for its directors. GetSwift has been ordered to pay 92.5% of the regulator’s legal costs.

Hunter stepped down as CEO in February 2022 after four years. Since then, Macdonald has been acting CEO.

In the Chapter 11 announcement, McDonald said, “This reorganization is the best way to ensure business continuity for our customers. The subchapter V process provides an efficient and fair mechanism to maximize value for all stakeholders.”

In its latest third quarter financial results, announced in May, GetSwift posted $8.9 million ($12.8 million) in revenue and a $3.6 million ($5.2 million) loss. year-to-date loss comes to $13 million ($18.6 million). The company has a market cap of $3.2 million.

After GetSwift’s shares were listed at $2.05 19 months ago, they were at %0.07 cents before trading was suspended.

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