Struggling music streaming service Guvera Limited must pay nearly $1 million to creditors of two subsidiaries – Guv Services and Guvera Australia – by Wednesday, or potentially place the subsidiaries into liquidation.
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Under a Deed of Company Arrangement agreed to by creditors on August 1 and lodged with the corporate regulator on August 19, Guvera Limited will pay $150,000 every month for the next year to creditors of Guvera Australia, and $30,000 per month to creditors of Guv Services.
The first instalments fall on August 31, along with a $761,200 in outstanding employee superannuation entitlements. Altogether $941,200 is due this week.
When asked by creditors what will happen if Guvera does not pay, administrator Ezio Senatore of Deloitte told creditors at an August 1 meeting that: "Creditors can consider an extension, or variation of the [deed], or place the company into liquidation."
He also noted Deloitte "will be active" in getting the contributions from Guvera Limited by the due date.
Meanwhile, the founders of Guvera, Damian Herft and Claes Loberg, have regained control of Guvera Australia, which they placed into administration on June 27.
Guv Services is now under the directorship of Warwick Burman, who has links to AMMA Private Equity. Guv Services employed 60 people, who were sacked when it went into administration.
Since closing its Australian streaming service on July 29, Guvera Limited now relies on income from India, Indonesia, Saudia Arabia, and the United Arab Emirates.
It has also been trying to raise more money from private investors, who have contributed nearly $200 million to date. However, investors have told BusinessDay they have struggled in recent weeks to get any response from Guvera about its financial performance and outlook.
Unsecured creditors of the two companies will get a maximum of 24 cents in the dollar, according to the deeds lodged with the Australian Securities and Investments Commission. Creditors of Guvera Australia were owed $4.1 million, but the DOCA will only recover $1.8 million.
Major unsecured creditors for Guvera Australia include Facebook, owed more than $1 million, music royalties collectors AMCOS APRA, owed nearly $1 million, the Victoria Racing Club, owed nearly $300,000, and app developer NextFaze, which is owed $463,000.
The biggest creditors for Guv Services are former senior employees and the NSW Office of State Revenue, which is owed $45,200.
Administrators have already received about $430,000 in outstanding wage entitlements, which will be distributed by administrators.
"Should the [deed of company arrangement] contributions be received on time, it is anticipated that the dividends for employee entitlements and superannuation are paid by September 9 and 30 September 2016 respectively," the minutes of an August 1 meeting recorded.
If Guvera Limited does not pay on time the creditors can call a meeting to decide whether they extend the deadline, vary the arrangement, or place Guv Services and Guvera Australia into liquidation.
Calls to Guvera's Robina offices were not returned yesterday.
Guvera was blocked from listing on the sharemarket by the Australian Securities Exchange on June 17. It followed a highly contentious IPO plan in which the Australian Shareholders' Association warned investors off the float.
The company was hoping to be valued at $1.3 billion, making it the biggest local player in the US-dominated music streaming business. This was despite it having made just $1.2 million in revenue in the 2015 financial year and amassing $81 million in losses.
