A plan to rescue ‘tech for good’ business, GoodBox, from administration and save £4.5m of taxpayer investment has been sanctioned by a judge in a landmark hearing at Leeds High Court.

The Part 26A Restructuring Plan that had been proposed by NGI Systems, a tech vendor of GoodBox, is understood to be the first of its kind outside of London, and will see GoodBox’s debt burden of more than £10m being slashed by more than 90%.

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 sanctioned plan will save the £4.5m of taxpayer funds provided to GoodBox in January 2021 via 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 will retain equity in the company and a share of future revenue as intended.

The latest hearing followed a vote by existing shareholders and creditors which saw administrators from Frost Group once again oppose the rescue package, having previously had their efforts to sell the business blocked by the court.

The court criticised the submissions of the administrators and ordered them to fall in line to accept the plan on behalf of the company. It also dismissed their separate application to sell the business and ordered them to pay the legal costs of NGI Systems in the matter.

Counterintuitively, the only substantial creditor voting against the plan was the British Business Bank, even though the alternative of a fire sale of assets would have wiped out all creditors and shareholders of GoodBox, meaning the UK taxpayer would have received nothing.

The sale of the business would also have likely meant that there would have been no technology continuity for GoodBox’s existing clients, a point that the Church of England formally raised with the administrators ahead of the hearing.

However, with more than 90% of the remaining shareholders’ and creditors’ votes cast in favour of the plan, it was able to be sanctioned by His Honour Judge Davis-White KC, sitting in the Business and Property Court in Leeds on 16 January 2023.

Tibor Barna, a founding partner at NGI Systems and co-founder of GoodBox, welcomed the decision of the court, commenting: “We are pleased that the court has again ruled in our favour, confirming our belief that the rescue plan backed by 20 new investors is the best route forward for the company and its clients, under the control of the new independent board of directors.

“It was disappointing that the Future Fund, via its director Luis Martin, acted in a manner that represented neither the interest of the taxpayer nor the mission and mandate of the Future Fund, which was to support the companies they invested in to save them from collapse during COVID.”

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

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 Barna, with Jeremy Frost and Stephen Wadsted of Frost Group appointed by the court as administrators, with a primary mandate to rescue the company as a going concern.

The Financial Conduct Authority (FCA) 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.

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NGI Systems has secured the financial support of a group of angel investors, some of who are existing shareholders of GoodBox, to fund the costs of the administration and the hefty legal expenses of proposing the rescue plan. These angel investors will now 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.

According to NGI Systems, there are also merger discussions ongoing between GoodBox and online charity shop GiveAsYouLive.com, which is backed by Geoff Squire, who established tech giant Oracle in the UK. Squire is also a backer of the now sanctioned rescue plan for GoodBox.

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