Creditors give Guvera deadline for rescue plan

Cash-strapped music streaming service Guvera has been given until next Thursday to come up with a ­rescue plan.

Guvera chairman and chief executive Darren Herft. Picture: Luke Marsden

Directors of cash-strapped music streaming service Guvera have been given until next Thursday to come up with a ­rescue plan acceptable to ­creditors owed $15 million.

The future of the group, headed by Gold Coast entrepreneur Darren Herft, was plunged into doubt on Monday when it put two subsidiaries into administration after the ASX knocked back Guvera’s bold plan to list with a valuation of more than $1 billion.

And while the move was designed to provide Guvera with time to restructure, it may end up costing the company $15,000 a day — almost $5.5m a year — in music licensing fees.

An IPO would have provided the loss-making Guvera with ­essential capital to pay its debts, including to the Tax Office and music copyright collection society APRA AMCOS.

At risk is about $180m pumped into the group by about 3000 investors, most of whom are believed to be clients of accountants signed up to Mr Herft’s AMMA Private Equity network.

This week, Guvera launched a final effort to raise $15m-$20m over the next fortnight.

Asked about progress of the fundraising attempt, Mr Herft said: “All going well.”

He did not respond to further queries.

Deloitte partner Neil Cussen, the administrator of the two ­subsidiaries, Guvera Australia and Guv Services, said he hoped Guvera management would ­propose a deed of company arrangement under which sacked employees would receive their full entitlements and other creditors would receive full or part payment over time.

He said about 60 workers ­employed by Guv Services were sacked this week, but about a third had been re-employed elsewhere in the Guvera group. Workers and 90 trade creditors are owed a total of about $15m and are to meet on Thursday.

“We’re working with Guvera management; we’re hoping we receive a proposal on or around the creditors’ meeting that we can discuss,” Mr Cussen said.

If creditors do not approve a deal, the two companies are ­likely to be liquidated.

“If there’s liquidation, that’s not a good result and we’d ­probably have to refer employees to FEG (the Fair Entitlements Guarantee Scheme),” Mr Cussen said.

The Weekend Australian can reveal that two days before calling in Mr Cussen, Mr Herft and accountant Clive Dolan set up a new company within the group, Guvera Operations.

“I understand it’s been formed to assist Guvera management with the restructure of the group,” Mr Cussen said. “It may re-employ some of those transferred or reassigned staff.”

He said the music license ­contracts needed to run the streaming service were held by Guvera Australia, which then on-licensed them to the head company in the group, Guvera Limited.

“We are reviewing the financial viability of Guvera Australia to provide these licence facilities to Guvera Limited,” he said.

This might mean Guvera Australia would bill Guvera Limited “up to $15,000 a day” to use the ­licences, he said.

Additional reporting: David Swan