Landmark legal proceedings are underway to try and rescue Manchester FinTech GoodBox from administration.

The move could save £4.5 million invested by the public purse and help to secure the future fundraising of thousands of charities.

At a hearing at Leeds High Court scheduled for Wednesday, 21st December 2022, NGI Systems, a tech vendor of GoodBox – led by Tibor Barna – is proposing a US-style Chapter 11 restructuring of GoodBox. 

Although Barna co-founded GoodBox in 2016 and was its chief technology officer, he was never a director of the company. 

GoodBox developed and delivered technology that allows contactless and digital donations to charities. In the past six years GoodBox has secured 2,200 not-for-profit clients including the Natural History Museum, The Church of England, British Red Cross and the Science Museum. Its clients have raised close to £20m via GoodBox technology, with more than 3.2m donations processed.

The company – which counts tennis legend Andy Murray among its investors – featured on our FinTech 50 innovation ranking in 2021 but was not eligible for 2022 due to it entering administration.

The legal hearing being pursued by NGI Systems is a landmark case that uses new UK legislation under the Corporate Insolvency and Governance Act 2020, designed to bring the UK in line with US legal practice that allows more flexibility in corporate restructuring by allowing a business to continue trading while reorganising its business affairs, debts, and assets.

NGI Systems’ proposed restructuring would ultimately reduce the debt burden of GoodBox from £10m to being debt free in three years, while involving 18 existing angel investors of GoodBox providing new funding and installing a new independent Board of directors from day one.

The £4.5m the plan aims to save for the taxpayer forms half of £9m in convertible debt finance secured by GoodBox in January 2021 from the UK Government Future Fund, a scheme designed to support innovative UK businesses during the pandemic and operated by the British Business Bank on behalf of the Government. The Bank would retain equity in the company and a share of future revenue as intended.

In a separate hearing on December 2nd, the administrators of GoodBox were denied permission by the court to sell the business ahead of the hearing on December 21stwhich would have left existing creditors, including the taxpayer, with nothing. 

NGI Systems welcomed the decision of the court. “The angel investors seeking to rescue GoodBox have taken on significant cost and risk to finance the legal proceedings,” said Barna.

“They are driven by the ambition and desire to do the right thing for the company, its clients, and creditors. We share a wholehearted belief in what GoodBox stands for and look forward to the court giving its due consideration to the rescue plan.” 

Financial consequences of the pandemic diminishing funds and the failure of GoodBox shareholders, board of directors and the so-called ‘lead lender’ of the Future Fund investment failing to agree on a way forward reportedly caused the business to become insolvent and consequently enter administration on 28th June 2022.

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A petition for the administration was granted by the courts to NGI Systems, a tech consultancy and key supplier of GoodBox since its inception and controlled by Tibor, with Jeremy Frost and Stephen Wadsted of Frost Group Limited appointed by the court as administrators.

The Financial Conduct Authority allowed GoodBox to continue trading while in administration but not to take on new clients.

NGI Systems has been funding the losses of GoodBox while in administration to allow it to continue trading and support its clients. 

NGI Systems says it has secured the support of a group of angel investors, who are also existing shareholders of GoodBox, to fund the costs of the administration and legal expenses of proposing the rescue plan. 

If the restructuring plan is sanctioned by the court following the initial hearing on 21st December, these angel investors will become majority owners of GoodBox, with NGI Systems acting as a facilitator and minority stakeholder.

According to court filings, following the rescue plan, Canadian donation solutions provider TipTap has expressed its intention to refinance GoodBox with £1.5m as part of a partnership bringing its product to the UK and allowing GoodBox products to enter the US market.

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