Buy now, pay later lender Laybuy calls in receivers
Monday, 17 June 2024
Buy now, pay later lender Laybuy has called in receivers.
After suspending payments last week, rumours circulated that Laybuy had gone bust, but there was also speculation that a buyer had been found for the business.
But in a statement on Monday, founder Gary Rohloff said receivers had been appointed to the Laybuy Group in New Zealand and Australia, but not to its UK operation.
“I am absolutely heartbroken at today’s decision to request the appointment of receivers to the Laybuy Group.
“This is a devastating time for the Laybuy team, and I will be doing everything I can to support them as we go through this process.”
Laybuy is a New Zealand company that expanded into Australia and the UK, making interest-free loans to users to buy things in stores and online, and was marketed as a cheaper, safer way to borrow than a credit card.
But last week its roughly 500,000 users were left unable to make payments, and a message on the Laybuy website said: “Payment services are currently suspended across all regions. This impacts our customers ability to create new orders online and in store.”
Laybuy grew rapidly after its launch in 2017, but undertook a major restructuring in 2022, reducing its staff by about a third and cancelling some projects to save money as it strove to become profitable.
But the company had been unable to turn things around, and Rohloff laid the blame at the foot of the struggling economy.
Rohloff said: “We had been working incredibly hard to execute a plan to achieve profitability after years of rapid growth.
“While we have been making good progress over the last two years, the economic downturn has been longer than we expected, and this has had a significant impact on the retail sector in both New Zealand and the United Kingdom.
“As a result, we have seen reduced consumer spending, higher credit losses, and increased fraudulent activity. This, alongside increased financing costs, created a perfect storm that was difficult to recover from,” he said.
“We tried everything we could to work our way through this, including progressing negotiations to sell the business which fell over at the last hurdle, but our efforts were unsuccessful.
“This left the board with no option but to make the gut-wrenching decision to voluntarily request the appointment of Deloitte as receivers.”
David Webb and Robert Campbell of Deloitte New Zealand have been appointed receivers and managers over Laybuy Group. In Australia, Glen Kanevsky and Jason Tracy of Deloitte Australia have also been appointed to take control of its Australian operation.
However, Deloitte said: “For the sake of clarity, the UK based entities and certain other entities in the Laybuy Group are not in receivership.”
Across New Zealand, Australia, and the UK there are about 10,500 merchants accepting Laybuy payments, and and about 500,000 shoppers with accounts with the company.
Laybuy was listed on the Australian Stock Exchange in September 2020 to fund growth in the UK, however, it was delisted in March last year, Deloitte said.
The appointment was made at the request of the companies’ directors, following efforts to seek additional investment and a sale of the business and assets, it said.
“The receivers are working with the companies’ employees, merchants and other affected stakeholders to assess the financial position of the companies and ascertain the way forward,” it said.
People with accounts should continue to pay them off, the receivers said.
“While Laybuy is not currently accepting new transactions, customers should continue to make payments as normal, and no action is required to be made by consumers at this stage.”
The business could still be sold, and potentially saved, they said.
“The receivers are working with the directors to explore options as to whether a sale of the business can be achieved so that Laybuy can recommence.”
More information regarding the receivership would be posted on the Deloitte website over the next few days, the receivers said.