Metigy suspected of insolvent trading while founder David Fairfull bought luxury homes

This outstanding sum resulted in the freezing of Mr. Fairfull’s Mosman and Wattamolla properties by the trustees.

“During the year prior to our appointment, Metigy raised capital in excess of $20 million from various investors which appears to have been used to service the day-to-day business requirements of the group entities and a
loan to the director that was used for the purchase of movable property, ”says the administrator’s report.

The six-bedroom, five-bathroom Mosman house has ocean views and was purchased in September of last year for $10.5 million. The sprawling Wattamolla estate, complete with a swimming pool, tennis court and indoor garden, was purchased in November for $7.7 million.

Due to falling property prices in 2022, the trustees believe that both houses are now worth less than what Fairfull paid for them. Mr. Fairfull was estimated to have $3.76 million in equity in all the houses.

“We note that mortgages are currently in default and that the secured lender, Pallas Capital, has now taken steps to foreclose on these properties by appointing in-possession mortgagees. we have put
Pallas Capital notified that they will sell the properties as quickly as possible to the benefit of creditors, as default interest accrues at a rate of $4,188 per day,” the report states.

Fairfull is not the same person as the president of accounting firm Hall Chadwick, who shares the name.

Mr. Fairfull’s homes are also being pursued by Metigy’s largest creditor, Regal Funds Management, which is owed $20 million and has filed a summons in the NSW Supreme Court.

Regal brought legal action against Mr. Fairfull and his wife Deborah, alleging that they misappropriated the funds applied to the properties. His company Fairfull Holdings is also named in the process.

Court documents seen by the financial review indicate that Regal wants trustees appointed for the properties and sold.

An instruction hearing is scheduled for October 28 and a defense has not yet been presented.

Regal portfolio manager Ben McCallum declined a request for comment.

Before being placed into administration, Metigy had been in front of investors earlier this year to raise more capital at a valuation of more than $1 billion.

The business was incorporated in 2017 by Mr. Fairfull and Johnson Lin and provides small business clients with an AI-powered platform that can provide insights into their leads to improve digital marketing. According to his LinkedIn profile, Lin was working as Metigy’s chief technology officer when it went under and there are no allegations of wrongdoing involving him.

Simon Cathro and Andrew Blundell of Sydney boutique Cathro Partners were appointed as trustees at the end of July.

The collapse caught the company’s 75 employees by surprise, but it owes the employees $2.6 million in unpaid wages, pensions and other entitlements.

Metigy’s other creditors include Five V Capital, Copia Investment Partners and the Australian Taxation Office.

Conservatively, administrators estimated that Metigy owed more than $32 million, up to $35 million.

They recommended that the company be liquidated, stating that “liquidation will allow the liquidators to pursue various legal claims against various parties that are only available if the Companies are liquidated.”

An investor who did not buy Metigy described it as a warning, saying the company had always refused to share detailed information with the fund.

In their report, the administrators attributed the reason for the company’s collapse to “poor strategic management”, “undercapitalization and inability to raise additional capital”, “inadequate cash flow or high use of cash”, “trading losses” and ” unreasonable transactions related to directors”. ”.

The company was said to have made almost no revenue since its inception, amassing just $61,120 in sales in the year to June 30 and $17,299 the year before.

While it earned limited revenue, its costs ballooned to nearly $10 million in fiscal 2022.

Creditors will vote on whether to liquidate Metigy this week.