The taxpayer is set to lose most of his investment in a start-up backed by Arsenal player Jorginho that collapsed after failing to repay a pandemic loan.
The company behind Gather, an app that provides access to the funds of asset managers such as BlackRock, was forced to file for bankruptcy after misunderstanding the government’s approach to the Future Fund program, bankruptcy filings show.
Directors of Gather International, the app’s owner, assumed their £3.2 million emergency loan, half of which came from taxpayers, would be converted into equity at the end of its term, the company’s administrator said.
The Future Fund’s debt will be converted into equity if new qualified financing is raised. Otherwise, the Future Fund has the option to require that the loan be repaid at maturity with a 100 percent “amortization premium,” effectively doubling the debt.
Chris Andersen, the liquidator, said the “company failed to recognise that the Future Fund was taking a hard line” and demanding repayment of the loan at the end of the three-year term rather than allowing it to be converted into equity, leaving the company in a “very difficult financial position”. He said the “significance” of correspondence from the Future Fund confirming the repayment demand “seems to have escaped the directors”.
Gather was placed into receivership by its directors at the end of May after the Future Fund filed for liquidation in April.
The company was founded in 2019 by Giovanni Bonaccorso, an Italian entrepreneur and former Goldman Sachs banker, and floated on the stock market last year. £5.2 million was invested in developing and marketing the app. It is aimed at young, everyday investors and its design is influenced by the accessibility of music and video streaming services. Investments can start from as little as £30 and customers can follow other users’ investment decisions.
Arsenal and Italy midfielder Jorginho, 32, owns almost 5 percent of the company, according to filings. He said last year he wanted to set an example for young footballers who don’t think about the future when they start earning money.
Jorginho at a Gather launch event at Soho House Festival
Gather had tried to reach an agreement with the government to extend the loan to save the company and ensure its continued existence, but this offer was apparently rejected.
A spokeswoman for state-owned British Business Bank, which manages the Future Fund, said the loan extensions were subject to conditions, including “timely submission of extension requests, satisfactory and transparent responses to due diligence checks and confirmation from directors that the company will be able to pay its debts as they fall due following the extension. We do not comment on individual cases.”
Andersen, of insolvency law firm AABRS, wrote that the company’s assets would likely be put up for sale if the bank refused an extension. The insolvency practitioner warned that Gather’s unsecured creditors, including the Future Fund, could be repaid at as little as 3.44 pence in the pound.
The Future Fund was a pandemic program designed to support innovative companies through government loans co-financed by the private sector. The British Business Bank said last week it was “cautiously optimistic that the portfolio will deliver a positive return to the taxpayer.” Requests for loan extensions have only been rejected in a few cases, it said.
Andersen, AABRS and Gather did not respond to requests for comment.
