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ayondo's B2C European social trading business files for insolvency

CATALIST-LISTED ayondo said on Wednesday that an insolvency application has been made for its indirectly-held German subsidiary ayondo GmbH (AYG), adding: "The insolvency of AYG will effectively cease the group's business-to-consumer European social trading business."

ayondo said it is currently considering several business opportunities through the strategic alliance with its partner, Golden Nugget Jinzhuan Limited or iMaibo, adding: "iMaibo has been actively introducing potential business opportunities to the group which the board is in discussion with potential business partners on. Appropriate announcements will be made if any definitive agreements arising from these discussions are entered into."

ayondo also said that it is currently working with investors to finalise agreements relating to a fundraising exercise, and that the investors have been informed of and are supportive of the insolvency application. Further announcements on the fundraising exercise will be made upon the signing of the agreements.

Explaining the events leading up to the insolvency application, ayondo noted that AYG's business had been declining since Q2 2018, given the deteriorating conditions of Europe's CFD (contract for difference) trading market and the inability to start marketing efforts to grow its European social trading business.

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Despite a restructuring exercise in Germany to reduce costs, AYG "continued to shoulder liabilities which it is not able to settle without funding", said ayondo. "Given the group's current financial position, the group is unable to fully pay the salaries for August 2019 and to fund the continuing operating and restructuring costs in Germany."

Under German law, once there is over-indebtedness or illiquidity, the managing director of the company has to file for insolvency. Accordingly, AYG's managing director did so, and a preliminary administrator has been appointed, said ayondo.

ayondo said it is "currently not able to determine the impact to the group arising from the insolvency application", but added that as far as the Board is aware, there should not be any liabilities accrued to the company.

It also said it will make further announcements on the outcome of the insolvency application as well as any other material developments.

The fintech firm in June saw an exodus of C-suite executives. Shares in ayondo have been suspended from trading since Feb 1.