Travelex owner making rapid plans for potential insolvency

(Sharecast News) - Travelex owner Finablr said it was making rapid plans for a potential insolvency appointment a day after it warned the company was at risk of collapse.
On Monday the company revealed it had issued $100m (?81m) worth of undisclosed cheques, announced a larger-than-expected financial blow from the coronavirus outbreak and its chief executive had quit.

"The board of Finablr has engaged an accounting firm to undertake rapid contingency planning for a potential insolvency appointment with a view to maximizing value in the group," Finablr said in a statement on Tuesday.

Last week Finablr said demand had slumped as travel bans were imposed around the world as the transport of cash became limited.

"Since that announcement, these constraints have become amplified and have now reached a point where they are having a material adverse impact on the company's operations, including resulting in the company no longer being able to provide certain payment processing services," Finablr said.

Finablr also said chief executive Promoth Manghat had stepped down after the undisclosed cheques that predated its stock market flotation in 2018 were discovered.

It added that the board had only recently been informed about the payments, which are the subject of an independent investigation.

Finablr, which shares a founder with beleaguered UAE healthcare provider NMC Health, said "urgent investigations" into the cheques were ongoing.

However, as a result of that and the liquidity issues, "the board is unable accurately to assess the financial position of the company and there is a material uncertainty about the group's ability to continue as a going concern".

"The board is looking to put in place a package of urgent measures aimed at restoring confidence and stability across its stakeholders."

Finablr has also been caught in an accounting scandal and potential fraud at NMC Health founded by Finablr's billionaire co-chairman and largest shareholder, Bavaguthu Raghuram Shetty.

Manghat's resignation came a month after his brother Prasanth Manghat was sacked as NMC's chief executive in February.

It was also revealed that a fund owned by Abu Dhabi state investor Mubadala had taken 3.4% stake in the company. The stake was purchased by MIC Capital Partners, which is owned and managed by Mubadala Capital, a unit of Mubadala Investment Co.