Legal proceedings underway to save GoodBox from administration
Melanie May | 20 December 2022 | News
Legal proceedings are underway to rescue GoodBox from administration, save £4.5mn of the funds invested in it from the UK Government Future Fund, and enable it to continue providing its services to charities.
At a hearing due to take place tomorrow (21 December) at Leeds High Court, NGI Systems, a tech vendor of GoodBox, led by Tibor Barna, is proposing a US-style Chapter 11 restructuring. Barna co-founded GoodBox in 2016 and was its Chief Technology Officer, but was never a Director of the company.
A contactless and digital donations tech provider, in the past six years GoodBox has worked with 2,200 not-for-profit clients including the Natural History Museum, The Church of England, British Red Cross and the Science Museum, which have raised close to £20mn via its technology, with more than 3.2mn donations processed.
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Landmark case
This legal hearing is, according to the firms, a landmark case that uses new UK legislation under the Corporate Insolvency and Governance Act 2020. The Act is designed to bring the UK in line with US legal practice that allows more flexibility in corporate restructuring by allowing a business to continue trading while reorganising its business affairs, debts, and assets.
The firms say that NGI Systems’ proposed restructuring would reduce the debt burden of GoodBox from £10mn to being debt free in three years, with 18 existing angel investors of GoodBox providing new funding and a new independent board of directors installed from day one.
The £4.5mn the plan aims to save for the taxpayer forms half of £9mn in convertible debt finance secured by GoodBox in January 2021 from the UK Government Future Fund, a scheme designed to support innovative UK businesses during the pandemic and operated by the British Business Bank on behalf of the Government. The Bank would retain equity in the company and a share of future revenue as intended.
In a separate hearing on 2 December, the administrators of GoodBox were denied permission by the court to sell the business ahead of the hearing on 21 December which would have left existing creditors, including the taxpayer, with nothing.
NGI Systems welcomed the decision of the court, with Barna commenting:
“The angel investors seeking to rescue GoodBox have taken on significant cost and risk to finance the legal proceedings.
“They are driven by the ambition and desire to do the right thing for the company, its clients, and creditors. We share a wholehearted belief in what GoodBox stands for and look forward to the court giving its due consideration to the rescue plan.”
Background to the case
Financial consequences of the pandemic, diminishing funds and the failure of GoodBox shareholders, board of directors and the ‘lead lender’ of the Future Fund investment to agree on a way forward, caused the business to become insolvent and enter administration earlier this year on 28 June. A petition for the administration was granted by the courts to NGI Systems, a tech consultancy and key supplier of GoodBox, with Jeremy Frost and Stephen Wadsted of Frost Group Limited appointed by the court as administrators. The Financial Conduct Authority (FCA) allowed GoodBox to continue trading while in administration but not to take on new clients.
NGI Systems has been funding the losses of GoodBox while in administration to allow it to continue trading and support its clients. NGI Systems have secured the support of a group of angel investors, who are also existing shareholders of GoodBox, to fund the costs of the administration and legal expenses of proposing the rescue plan.
If the restructuring plan is sanctioned by the court following the initial hearing on 21 December, these angel investors will become majority owners of GoodBox, with NGI Systems acting as a facilitator and minority stakeholder.
According to court filings, following the rescue plan, Canadian donation solutions provider TipTap plans to refinance GoodBox with £1.5mn as part of a partnership bringing its product to the UK and allowing GoodBox products to enter the US market.
More on GoodBox
GoodBox Co generates £1mn for charities while in administration August 2022
Administrators appointed for GoodBox Co Labs July 2022
GoodBox contactless devices hit milestone of 1m donations June 2021
About Melanie May
Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via thepurplepim.com.