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Business News Digital
Creditors to take hit in Guvera settlement, as rumours emerge about streaming firm’s Indian operation
By Chris Cooke | Published on Wednesday 3 August 2016
Former employees caught up in the administration of two subsidiaries of flagging streaming firm Guvera should see all that they are owed as a result of the ‘deed of company arrangement’ that was passed this week, though other creditors won’t fare so well.
As previously reported, creditors of Guvera Australia and Guv Services – the two entities that the Guvera parent company put into administration in the wake of its blocked IPO – have now agreed to the deed of company arrangement, which will stop the companies from actually being liquidated.
According to Aussie tabloid The Courier Mail, under the deal former staff should get the AUS$1.2 million they were collectively owed, though some ex-employees have already expressed concerns about whether those payments will in fact be made.
Other creditors of Guv Services will likely see 6.8 cents for each dollar they were owed, while Guvera Australia’s creditors will see no more than 24.8 cents in the dollar. It’s thought the Australian taxman will take the biggest hit as a result of the arrangement.
The overall Guvera business will be hoping that the deal means it can now move beyond recent woes. Though that will depend on whether the firm is able to stick to commitments made in that arrangement, while also making good on plans to grow revenues in those emerging markets where the streaming service is still operational following recent cut backs.
Though there is more bad press to deal with, after media and marketing site Mumbrella reported on leaked documents allegedly coming from a May board meeting at Guvera. The site claims that the documents show the streaming firm’s Indian operation “is in complete disarray with the division haemorrhaging cash, unable to pay its bills and struggling to make its ad-funded model work”.
Guvera, of course, has hit back at critics in recent months by arguing that its business model is different to that of rival streaming music companies in that it is focused on providing ad-funded free services that are particularly suitable for emerging markets like India.
But Mumbrella says the board meeting papers show that Guvera India made a AUS$82,000 loss in April, having brought in just AUS$11,352 in revenues. Perhaps more worryingly, those revenues were somewhat down on previous months, January income having reached AUS$78,365. And even that is a long way off the millions in revenue the firm is rumoured to be banking on in the Indian market to make its business plan work long-term.
The papers also reportedly admit that slow or non-payments to key partners in the Indian market, including labels and other suppliers, are “beginning to affect opportunities”, with at least one unpaid partner apparently considering legal action.
All of which seems to confirm widespread concerns about the future of the Guvera business. Though the company’s co-founder Claes Loberg – who has taken over as CEO at the company since his fellow founder Darren Heft stood down last month – has told the aforementioned Courier-Mail that he isn’t aware of the documents Mumbrella is reporting on, while disputing some of the figures published, including those relating to alleged April revenues in India.
