LenddoEFL could face bankruptcy over $600k in unpaid fees

Troubled credit-scoring firm LenddoEFL has been dealt another blow.

Fintech investment bank SenaHill APAC, the regional affiliate of US-based SenaHill Partners, has issued a letter demanding that LenddoEFL pay its outstanding debt of US$600,000 by August 13 or face legal action and begin winding-up proceedings.

People selling dried fish at street market in Manila, Philippines, one of LenddoEFL’s core markets / Photo credit: Phuong Nguyen Duy / 123RF

According to the letter, which was seen by Tech in Asia, SenaHill APAC was engaged by LenddoEFL between April and August this year to perform “strategic consulting services,” which included investor introductions, meetings with potential acquirers, and joint-venture opportunities.

The fees include a monthly consulting service fee of US$20,000 and a US$500,000 transaction fee upon the closing of any transaction. A US$1 million “financial transaction” was recently closed, the letter said.

Failure to pay the outstanding debt of US$600,000 would imply that LenddoEFL is insolvent, given that “[the company] has neither sufficient cash nor other liquid assets, and no surviving intellectual property.” The letter also noted that LenddoEFL’s immediately due liabilities exceed US$2.5 million. These include employees’ back pay, outstanding payments to vendors, and an outstanding debt facility.

“At least a dozen” staff haven’t received their salaries since March, according to a former LenddoEFL employee who is also owed payments.

The letter was addressed to ex-CEO Paolo Montessori and Paul Devine, the company’s executive chairman and former chief financial officer, as well as investor Arjuna Costa of Flourish Ventures. They didn’t immediately respond to Tech in Asia’s request for comment.

According to LinkedIn, Montessori left the company in August and began a new role as the chief operating officer at Singapore-headquartered DT One, a business-to-business network for mobile top-up and data solutions. He continues to hold a director position at LenddoEFL, according to public filings.

In a June 2020 interview with Tech in Asia, Montessori said that LenddoEFL had been at the tail end of a grueling restructuring effort, which entailed sudden layoffs and a cash crunch that the Covid-19 pandemic had exacerbated.

“In a Covid-19 world, we faced a substantial headwind that affected everyone worldwide and required us to consider all options available to us globally,” he explained.

See: Trouble at LenddoEFL: Staff departures, culture clashes, and a contentious hire

The startup was expected to reach a positive cash position within the next year. An additional US$150,000 to US$200,000 is estimated to be owed to ex-employees in salary payments despite “repeated guarantees of financing from the company’s Board and dozens of failed promises to pay,” according to a separate letter signed by several former employees. The US$1 million financial transaction mentioned in the letter – a fraction of what LenddoEFL had been looking to raise originally – would have helped alleviate that.

While a fixed finder’s fee is unusual (as opposed to a percentage-based fee), a SenaHill spokesperson claims that LenddoEFL originally aimed to secure US$15 million instead, with a “probable outcome of US$20 million.” That would have placed a US$500,000 transaction fee in the range of 2.5% to 3% of the total sum raised. “[The company] had asked for a ‘hard cap’ on the fee,” the spokesperson said.