Logistics software startup GetSwift is dead in Australia, on life support in the US

- August 5, 2022 3 MIN READ
GetSwift cofounders Bane Hunter and Joel Macdonald.
Former ASX-listed logistics tech company GetSwift has placed its Australian arm in the hands of liquidators, while the publicly listed parent business, GetSwift Technologies, has been suspended from Canada’s NEO Exchange after filing for Chapter 11 bankruptcy protection in the US.

The company’s Australian subsidiary, GetSwift Ltd, was placed into liquidation on July 29 with Kate Conneely and Rahul Goyal of KordaMentha appointed liquidators.

KordaMentha did not respond to a request for comment.

On Monday, the New York-headquartered parent company – the  business relocated to North America in early 2021 after falling foul of Australian regulators – has instigated Subchapter V filing under Chapter 11 in New York, saying its assets and liabilities both sat between $1 million and $10 million.

Subchapter V was introduced in early 2020 as a faster, easier, and cheaper version of Chapter 11 bankruptcy for small businesses to restructure.

GetSwift announced plans to sell its software assets to US property fund Stage Equity Partners for US$10 million (A$14.2m) in May before filing for Chapter 11 protection on August 2. It now says Stage Equity affiliate SF2 will serve as the “stalking horse” bidder to establish a minimum value for company’s SaaS assets in an auction.

GetSwift emerged in 2015 out of former AFL footballer Joel Macdonald’s alcohol delivery startup Liquorun. Within a year it listed on the ASX at 20 cents a share, raising $5 million.

Within two years its actions would lead to the ASX to tighten its market disclosure requirements in 2018.

But at the time, GetSwift quickly became one of the country’s hottest tech stocks, thanks to a series of announcements of deals with major corporations such as Amazon, the Commonwealth Bank and Yum Brands.

Having raised $24 million in June 2017, GetSwift shares popped by 800% to $4.30 within six months amid a vigorous PR-driven series of supposed customers wins, and the company raised $75 million from investors at $4 a share.

Within two months the share price plunged to 70 cents amid growing questions about the truth behind GetSwift’s deals.

In the wake of the revelations, a shareholder class action was launched in 2018. It was settled for $1.5 million.

Misleading and deceptive conduct

As a damning 868-page Federal Court judgment handed down in November 2021 subsequently concluded, following a case brought by corporate cop ASIC, the company, Macdonald and fellow director Bane Hunter, engaged in misleading and deceptive conduct.

Justice Michael Lee found “what might be described as a public-relations-driven approach to corporate disclosure on behalf of those wielding power within the company, motivated by a desire to make regular announcements of successful entry into agreements with a number of national and multinational enterprise clients.”

Those clients were only trialling, or contemplating a trial, of the GetSwift platform and the agreements, when announced, were not ongoing or revenue generating. Australian Securities and Investments Commission took legal action.

One involved CBA, another Amazon, and the Court has heard that legal representatives from both companies counselled against the planned market announcements. The CBA announcement was said to be worth $9 billion, but that was based on five years when the contract was for two.

The ASX suspended GetSwift shares following the Amazon announcement because it was too vague. Amazon reportedly prohibited any announcement as a condition in the deal.

The Court found the announcements were misleading and the company had breached its continuous disclosure obligations.

Hunter was “knowingly involved” in 16 of 22 continuous disclosure breaches and 29 instances of misleading and deceptive conduct. For Macdonald it was 20 of the 22 and 33 instances of misleading and deceptive conduct. Both men breached their director’s duties.

By then, GetSwift had already decamped to Canada, delisting from the ASX in January 2021. It listed on the NEO Exchange that same month after gaining Federal Court approval, despite opposition from ASIC.

Approval was conditional on the company covering its Australian legal costs and penalties.

Hunter and Macdonald lodged an appeal against the Court finding in the ASIC case, but withdrew it in May.

Penalties in the ASIC case have yet to be determined with the case heading back to court following the withdrawal of the appeal.

ASIC is seeking a $15 million penalty and 12-year bans for its directors. GetSwift has been ordered to pay 92.5% of the regulator’s legal costs.

Hunter stepped down as CEO after four years in February 2022. Macdonald has been acting CEO since.

In the Chapter 11 filing announcement Macdonald said: “This reorganisation is the best way to ensure business continuity for our customers. The Subchapter V process provides an efficient and equitable mechanism to maximise value for all stakeholders.”

In its latest financial results for the third quarter, announced in May, GetSwift posted revenue of $US8.9m ($12.8m) and a loss of $US3.6m ($5.2m), bringing its year-to-date loss to $US13m ($18.6m). The company has a market capitalisation of $3.2m.

Having listed at C$2.05 19 months ago, GetSwift shares sat at %0.07 cents before trading was suspended.