The embattled Travelex owner Finablr is at risk of collapse after the company revealed it had issued $100m (£81m) worth of undisclosed cheques and announced a larger-than-expected financial blow from the coronavirus outbreak. Finablr said its chief executive Promoth Manghat had stepped down, as the board tried to gain a clearer picture of the company’s finances.
Last week Finablr said travel restrictions designed to limit the spread of Covid-19 had weakened demand for its services and disrupted the transport of cash. That impact has worsened after a raft of border closures and travel bans across the world. “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.
Those problems have been compounded by news that the company discovered $100m worth of undisclosed cheques that predated its stock market flotation in 2018. Finablr said the board had only recently been informed about the payments, which are the subject of an independent investigation.
It is a major blow for Finablr’s reputation, which had tried to distance itself from an accounting scandal and potential fraud at NMC Health, the troubled hospitals firm that was founded by Finablr’s billionaire co-chairman and largest shareholder, Bavaguthu Raghuram Shetty.
Finablr said: “As a result of the foregoing events, 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.”
Those measures include Manghat’s resignation, which comes a month after his brother Prasanth Manghat was sacked as NMC’s chief executive in February. Finablr said its outgoing boss would help support the business until it found a suitable successor.
Finablr said it was also undertaking a comprehensive review of the company’s financial position including how it manages its cash. The board is now looking at the company’s “strategic options” and will appoint another accounting advisory team to strengthen its financial management.
It comes just months after the company was attacked by ransomware hackers in January. The breach disrupted online travel money services for clients including Royal Bank of Scotland, Barclays, Tesco Bank and Asda.
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