© eFishery
Late last year, the aquaculture industry was shaken by allegations of the severe misconduct of eFishery's cofounders, Gibran Huzaifah and Chrisna Aditya, who allegedly misrepresented the company's sales and profits, leading to their dismissal.
Now, some months on from the initial discovery, the dust has far from settled. Investigators from FTI Consulting - the firm hired to assess the true financial state of the startup - have found the company to be in a far worse position than previously thought.
"eFishery is not commercially viable in its current form. The cash balance continues to deplete without a restructuring plan in place,” reported an FTI Consulting presentation, according to Bloomberg News.
Before the alleged financial misconduct had come to light, eFishery was a rising star in the aquaculture world, with investments in the company totalling an estimated $315 million, spread over five funding rounds. The ongoing FTI Consulting investigation currently estimates that as little as $50 million of this remains in cash, likely spelling bad news for investors.
According to Bloomberg News, the FTI consulting presentation warned that investors may receive as little as 9.5 cents for every dollar invested, in an optimistic scenario, with the potential for this to be even lower should the situation continue to decline.
A partial explanation for the state of eFishery's finances is the significant amounts of debt accumulated by the company. FTI investigators found the default rate on the company's lending agreements to be incredily high, with eFishery being responsible for all losses when loans are not repaid by farmers.
According to Bloomberg News, as much as 76 percent of eFishery’s $68 million in accounts receivable are currently marked as more than two months overdue.
"In theory, the proceeds from the harvest or cash collected from farmers should be repaid back to the lenders. In practice, however, eFishery faced significant challenges when it comes to collection from borrowers. Substantial costs would need to be incurred to realise or recover these outstanding amounts from borrowers who are scattered all across the country,” said the FTI presentation.
