By Nick Bonyhady and Anthony Segaert
An artificial intelligence marketing start-up once valued at $1 billion collapsed into administration with just $20,000 in the bank and an outstanding loan of $4.7 million to its sole director and chief executive which was allegedly used to fund “personal asset purchases”.
Minutes from a meeting of creditors on August 9 obtained by The Sydney Morning Herald and The Age show administrators for start-up Metigy are investigating the alleged personal asset purchases by the collapsed firm’s former boss David Fairfull (who is not the David Fairfull that chairs accountancy firm Hall Chadwick).
David Fairfull, sole director and chief executive of collapsed start-up Metigy, allegedly received a personal $4.7 million loan from the company.
The administrators are also reviewing company records to check whether Metigy traded while insolvent or entered into any uncommercial transactions.
The minutes reveal administrators Cathro & Partners believe the start-up did not file “the majority” of its tax returns or hire external accountants to help complete its financial statements in the years since it was founded.
Metigy, which promised to help companies improve their digital marketing through artificial intelligence, appeared to be a fast-growing technology start-up that had attracted more than $20 million in investment since it was founded in 2015. One investor, Five V Capital, reportedly valued it at $1 billion in April.
But at the end of July, Fairfull placed Metigy into administration, stopped trading and more than 70 employees were made redundant. Investors including Regal Funds Management, along with Metigy’s administrators itself, have placed a legal freeze on a $10.5 million trophy home in Mosman that the Fairfulls bought last year.
Fairfull and Five V did not respond to requests for comment. Regal declined to comment.
The meeting minutes show that when Metigy went into administration it had about $20,000 in the bank and a term deposit of more than $200,000, plus the money owing from Fairfull. It also owed employees about $1 million in entitlements along with $227,000 to suppliers, an intercompany loan between Metigy entities of $16 million and statutory liabilities of more than $2 million. Investors were owed about $32 million via convertible notes, according to the minutes. The government is also likely a creditor via the Australian Tax Office, a representative said at the meeting.
According to the minutes, administrator Simon Cathro told an ATO representative at the meeting who inquired about the $4.7 million loan: “From the administrators’ investigations to date, it appeared as though the loan to the director funded personal asset purchases which were subject to further investigations.”
The only director of Metigy when it went into administration was Fairfull. It is unclear when the loan was made or on what terms.
Cathro also said that the administrators believed that nothing aside from payroll data automatically sent by Metigy's accounting software had been lodged with the ATO, though elsewhere the administrators' report says that Metigy's former chief financial officer filed some lodgments with the tax office.
A spokesman for ASIC did not answer questions about whether the regulator is investigating but said: “ASIC has commenced work with the Metigy administrators and will continue our involvement in the matter.”
“The administrators will report to ASIC in accordance with their obligations and this report will be assessed by ASIC in due course,” he said.
A spokeswoman for Cathro & Partners declined to comment, other than to say a report to creditors would likely be issued by the end of this week with a meeting to follow. An ATO spokeswoman said it could not comment because of confidentiality rules imposed by Australian law.
As of the mid-August meeting, 18 parties had expressed interest in Metigy but none had made an offer to buy it.
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