BNPL share Openpay collapses, receivers called in

The writing is on the wall for this BNPL provider…

The Openpay Group Ltd (ASX: OPY) share price isn't going anywhere on Monday.

This morning, the embattled buy now pay later (BNPL) provider made a very troubling announcement.

A woman screams and holds her hands up in frustration.

Image source: Getty Images

What's going on with the Openpay share price?

Last week, Openpay revealed that it was having problems getting hold of its $41 million unused finance facilities.

It appeared to indicate that the financiers weren't overly keen to put this money up due to its abject financial performance and fear that it would essentially be money down the drain.

Unfortunately, this left the company with a balance of $17 million, which is less than it burned through during the fourth quarter of calendar year of 2022.

Worse still, it meant that Openpay has breached the covenants of loan agreements with senior secured lenders.

And while management advised that constructive discussions were underway with its senior secured lenders, this seems to have amounted to nothing and receivers have now been called in.

Receivers called in

According to the release, Barry Kogan, Jonathan Henry, and Rob Smith, partners of McGrathNicol were appointed joint and several receivers and managers of Openpay at the weekend.

These appointments mean that the receivers and managers are now in control of assets, operations, and trading activities of the company.

And while they are working urgently to determine the appropriate strategy for the business, it doesn't look good. The release notes that at this time, customers will no longer be able to use the Openpay platform for new purchases. Though, they are still required to pay any outstanding balances in accordance with their existing agreements.

As for the Openpay share price, it will remain suspended until further notice while the assessment of the appropriate strategy is ongoing. A further announcement will be issued in this regard when the time is right.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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