BNPL lender Laybuy in receivership

Buy now, pay later (BNPL) lender Laybuy has called in the receivers after suddenly suspending services and payments last week. From Monday, Laybuy Group Holdings Ltd, Laybuy Holdings Ltd and Laybuy Australia Pty Ltd are in receivership.

Deloitte New Zealand's David Webb and Robert Campbell have been appointed receivers and managers of Laybuy Group and Laybuy Holdings, whereas Glen Kanevsky and Jason Tracy of Deloitte Australia have been appointed for Laybuy Australia Pty Ltd.

Laybuy Group's UK businesses and other entities are not in receivership, Deloitte said.

Deloitte says its appointment was made at the request of the companies’ directors, after attempts to get additional investment and a sale of the business and/or assets.

“The decision to request the appointment of receivers was gut wrenching," Laybuy founder and managing director Gary Rohloff said in a statement.

"We were working hard to execute a plan to profitability, but this was impacted by a sharp deterioration in the retail environment. A deal to sell the business fell through at the last minute and this left the board with no option but to appoint receivers," he added.

Rohloff told interest.co.nz that he is "absolutely heartbroken" by the decision to appoint receivers, saying he will do everything he can to support the Laybuy team as the company is being liquidated.

He attributed the company failure to a longer than expected economic downturn that has had a significant impact on the retail sector in New Zealand and the UK.

"As a result, we have seen reduced consumer spending, higher credit losses, and increased fraudulent activity. This, alongside increased financing costs, created a perfect storm that was difficult to recover from," Rohloff said.

As of June this year, Laybuy has over 10,500 merchant and around 500,000 users in NZ, Australia and the UK.

“While Laybuy is not currently accepting new transactions, customers should continue to make payments as normal, and no action is required to be made by consumers at this stage," receiver Webb said.

"The receivers are working with the directors to explore options as to whether a sale of the business can be achieved so that Laybuy can recommence enabling new transactions,” Webb added.

The company is understood to have 70 employees at its North Shore offices.

Laybuy's listing on the junior Catalist exchange says it has two capital facilities: one from Kiwibank at $30 million, maturing this month, and a second one from Britain's Partners for growth at £20 million (NZ$38.1 million). It is not known how much these facilities are drawn.

Catalist has 5426 shareholders listed for Laybuy, at a total value of approximately $5.38 million, down around 98% of its initial peak valuation.

Prior to Catalist, Laybuy was listed on the Australian Stock Exchange (ASX) but delisted in March last year, as its share price plunged to 3.7c.

The BNPL lender was set up by Rohloff in New Zealand in 2017, and had since expanded into the Australian and UK markets.

Although initially unregulated, BNPL lenders have increasingly been brought into consumer credit rules around the world, including in New Zealand. The sector grew rapidly initially, but as interest rates climbed and the economy worsened, several BNPL companies faced serious difficulties and shut down, like Genoapay in New Zealand.