Gather, the investment app backed by Arsenal footballer Jorginho, has filed for bankruptcy after failing to repay a government pandemic loan, likely resulting in significant losses for taxpayers.
The app, which aims to democratise access to the funds of major asset managers such as BlackRock, was launched by Gather International in 2019. Despite a promising launch and a £5.2 million investment in development and marketing, the company faced financial ruin after misunderstanding the terms of the government’s Future Fund scheme, according to recent bankruptcy filings.
The directors of Gather International mistakenly believed their £3.2 million loan from the Future Fund – half of which was taxpayers’ money – would convert into equity when it matured. However, the Future Fund’s debt will only convert into equity if new, qualifying finance is raised. Otherwise, the Fund has the option to demand repayment at a 100% “redemption premium”, effectively doubling the debt at the end of the loan term.
Chris Andersen, the AABRS administrator handling the case, said the company was caught off guard by the Future Fund’s strict policy of demanding repayments rather than allowing conversion into equity. The significance of the Future Fund’s correspondence confirming the repayment demands was apparently overlooked by the directors, leaving Gather in a financially unsustainable position.
Gather filed for bankruptcy in May, shortly after the Future Fund filed for liquidation in April. Despite efforts to negotiate an extension of the loan, the state-owned British Business Bank, which manages the Future Fund, ultimately rejected the application.
The collapse of Gather is a major blow, especially given its innovative approach, which targeted young investors and allowed investments from as little as £30. The app, inspired by the accessibility of music and video streaming services, allowed users to track the investment decisions of others.
Jorginho, the 32-year-old Arsenal and Italy midfielder, owns almost 5 percent of the company and had expressed his desire to be a role model for young footballers and encourage them to think about their financial future early in their careers.
With the government refusing to extend the loan, Andersen suggests Gather’s assets are likely to be sold and unsecured creditors, including the Future Fund, may receive as little as 3.44 pence per pound.
The Future Fund, which was set up during the pandemic to support innovative companies, has come under scrutiny following this case. However, the British Business Bank remains “cautiously optimistic” that the program will ultimately deliver a positive return for taxpayers. The bank also noted that requests for loan extensions had only been rejected in a small number of cases.
Neither Gather nor its representatives responded to requests for comment on the situation.
