Provider in Receivership Offers Buy Now, Pay Later Option
The downturn in the BNPL sector has resulted in a prominent Australasian provider being placed into receivership after efforts to find a buyer fell short.
The buy now pay later (BNPL) market in New Zealand and Australia has been shaken by the collapse of provider Laybuy, which has announced its placement into receivership.
Deloitte, the company’s receivers, disclosed that Laybuy Group Holdings Limited, Laybuy Holdings Limited, and Laybuy Australia Pty Ltd experienced a decline in business due to slow sales and were unable to return to profitability following the boom of the Covid era when BNPL enjoyed rapid growth.
Established in 2016 in New Zealand by Gary Rohloff, his wife, and two sons, Laybuy was once valued at AU$358 million (US$240 million).
Mr. Rohloff, who also held positions as the managing director of online retailer EziBuy, CEO of Number One Shoes, and Warehouse Stationery, expressed his devastation at the decision to appoint receivers to the Laybuy Group.
“This is a challenging time for the Laybuy team, and I am committed to providing them with all the support they need through this process,” he stated.
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Laybuy, like many other BNPL providers, allowed customers to make purchases and pay over six weekly interest-free installments.
It served as a popular alternative to traditional credit options, especially favored by younger consumers seeking flexible payment solutions without the high interest rates typical of credit cards.
What Caused the Downturn?
Customers became aware of issues when the Laybuy platform became inaccessible last week, displaying a maintenance error message.
A notice posted on Friday stated that Laybuy’s services, including all payment options, were suspended temporarily without a specific resolution timeline provided, thanking customers for their patience.
Mr. Rohloff mentioned that despite efforts to return the company to profitability, the search for a new buyer was unsuccessful.
He attributed Laybuy’s financial struggles to the cost-of-living crisis, leading to payment delays by customers and an increase in fraudulent activities.
“We had been working tirelessly to implement a plan to achieve profitability after years of rapid expansion,” Mr. Rohloff stated.
“While we made progress over the past two years, the prolonged economic downturn had a significant impact on the retail sector in New Zealand and the UK.”
“This, coupled with rising financing costs, created a difficult situation from which to recover.”
The sale potential of Laybuy’s Australian branch was also affected by increased compliance under amendments to the Credit Act recently introduced by the federal government.
Laybuy is not the only BNPL provider facing market capitalization declines. In 2022, Australian BNPL company Zip Pay withdrew from a $491 million merger with US-based lender Sezzle due to unfavorable economic conditions.
During the same year, Australian BNPL leader Afterpay was sold to US-owned Fintech Block Inc. at half its sale price by year-end.
Impact On Customers
Deloitte stated that a new buyer is being sought while Laybuy remains under administration.
Customers currently repaying debts were advised by the receivers to continue making payments as usual, as the platform is now suspended, and new transactions will not be processed.
The receiver’s statement clarified that the UK-based entities within the Laybuy Group were not affected by the closure in Australasia.
“For clarification, the UK-based entities and select other entities within the Laybuy Group are not subject to receivership,” Deloitte affirmed.
