Administrators reveal Openpay has $1.2m cash, $66.1m in debts

A report by Openpay’s administrators reveals the ASX-listed lender ran up huge debts across the business, collapsing with just $1.2m in its bank accounts.

Openpay was one of several buy now pay later lenders that rode the wave of market interest after listing in December, 2019 Picture: NCA Newswire / Gaye Gerard

Former buy now pay later market darling Openpay collapsed in February owing more than $66.1m, with just $1.2m left in cash in the bank, administrator documents have revealed.

Documents filed with the corporate regulator in the wake of Openpay’s collapse have revealed the parlous state of the short term lender’s finances in the days leading up to its tumble into administration.

The lender, which once rode the wake of ASX-investor interest in the wake of Afterpay, slipped into administration owing millions to creditors, along with a further $4.1m in unpaid leave and wages to employees in its wreck.

The report on company activities, prepared by Openpay’s receivers McGrathNicol, shows the firm had tapped out credit lines to a variety of funders in the weeks leading up to its collapse after it was unable to secure new lines of finance.

Along with the millions owed to creditors, Openpay reported debts of $267.5m for intercompany loans made to the lender by associated entities in the group.

However this was offset by $117.77m owed to Openpay for intercompany loans made by the corporate entities in administration to associated entities in the group.

The report does not detail the nature or purpose of these loans.

These debts were in addition to a further $351,699 in sundry debts owed to Openpay in unpaid invoices.

The report also shows Openpay had run up considerable tax debts to authorities in Australia and New Zealand.

This included $257,689 in unpaid Australian tax liabilities along with a further $NZ7,027 from its kiwi lending business.

Openpay CEO Dion Appel. Source: Supplied.

Openpay was one of several buy now pay later lenders which rode the wave of market interest in the short term credit lenders after listing in December 2019 at $1.60 a share, before soaring to $4.70 in August 2020.

Openpay was placed in a trading half in February this year, after sinking to 20c, after warning it had been unable to secure “funding amounts sought under a Utilisation Notice served under the Company’s working capital facility with A H Meydan Pty Ltd, as foreshadowed in the Company’s Appendix 4C lodged on 31 January 2023”.

“The non-payment of the Utilisation Notice, which fell due on 31 January 2023, has placed the Company in breach of covenants in loan agreements with the Company’s senior secured lenders.“

Openpay attempted to assure investors it would return to trade amid discussions with lenders and non-conflicted directors, before talks fell through.

Openpay announced in November it had upsized its receivables funding pot from $55m to $110m after GCI Commercial Finance Fund and Fortress investment Group locked in support for the lender.

At its January update Openpay, revealed it had run a $37.87m loss for the six months to December.

However, the lender noted it had 3.19 quarters of funding left with $58m in available funding.

Openpay targeted transactions up to $20,000 in value, offering fixed term lending from a range of merchants for higher value transactions.

Openpay’s chief executive Dion Appel led the lender after taking on the job in July 2021.

Openpay’s collapse came amid a broader shake-out of the buy now pay later sector.

Sezzle and Zip have both faced collapsing investor confidence as the two dumped attempts to expand into other markets in a push for profitability, while Laybuy moved to delist in January.