Metcash challenger IRExchange, an online grocery wholesaler, has gone into administration after being sued by disgruntled investors unhappy about a proposed recapitalisation.
McGrath Nicol was appointed administrator on Wednesday after a syndicate of investors lodged a statement of claim in the NSW Supreme Court last Friday.
The administrators are expected to explore selling the four-year-old business or recapitalising it through a deed of company arrangement.
Documents lodged with the Australian Securities and Investments Commission show chief executive Brett Charlton and directors Ian Hicks and Anand Sundaraj resigned on Tuesday.
IRexchange aimed to disrupt the grocery, liquor and pharmacy wholesaling markets by enabling independent retailers and pharmacies to order stock directly from suppliers through an online trading platform, bypassing wholesalers such as Metcash.
The company had been planning an initial public offering later this yearafter being forced to pull the plug on a $17 million IPO in March and resolving a $1 million legal claim from convertible noteholder James Baillieu.
A company associated with two IRexchange non-executive directors, John Ayre and Ian Hicks, and a former chairman, Alan Goodfellow, agreed to pay more than $1.2 million to Mr Baillieu.
Mr Baillieu launched legal action against the company in January, alleging misleading and deceptive behaviour, after unsuccessfully demanding the company return his $1 million investment.
Mr Baillieu had alleged IRexchange made false representations about customer numbers when he invested $1 million in August 2017 and alleged it made false claims about active customer numbers in the prospectus for a proposed $17 million initial public offering in February 2019 which would have valued the business at about $74 million.
Mr Baillieu contacted the Australian Securities and Investments Commission, which put an interim stop order on the prospectus.
IRexchange issued a supplementary prospectus and extended the offer, but eventually pulled the plug on the IPO and refunded subscriptions.
In the original prospectus, which was lodged just before Christmas 2018, IRexchange claimed it had signed up more than 600 independent retailers – 50 per cent of whom are trading on the platform regularly – and 70 food, grocery and liquor suppliers including Unilever, Proctor & Gamble, Reckitt Benckiser and Carlton & United Breweries.
The company, which had raised more than $30 million from investors and spent at least $20 million on product and technology development, had also signed a memorandum of understanding with pharmacy wholesaler Sigma, which had taken an equity stake in the business.
Chaired by former Coca-Cola Amatil and Lion Dairy and Drinks executive Andrew Reeves, IRexchange aimed to achieve at least $4 billion in gross sales as retailers and suppliers shifted to its online portal.
According to the last available accounts, it generated sales of $13 million in 2018 but lost $16.2 million, taking accumulated losses to $43 million.