Guvera sued by ex-UK employees for £10 million

Australian streaming service Guvera is being sued for £10 million (Australian $21.1 million) in damages by nearly 100 former employees in the UK.

They had worked in the now-defunct music streaming and video-on-demand service Blinkbox which had been owned by UK retailer Tesco and had 2.8 million users.

Guvera bought the music streaming side in January 2015 as part of its entry into the UK market, while media group Talk Talk took over the video division. The terms of the Guvera purchase were confidential but the price tag was estimated at £4 million ($8.4 million) by the UK media.

Guvera put Blinkbox into administration in June.

A class action lawsuit by the 100 ex-staffers in the UK Employment Tribunal is against Guvera Ltd and two of its UK-based subsidiaries.

The employees say that after Tesco sold Blinkbox to Guvera, both companies had allegedly provided a written assurance that they would receive redundancy payments if cut backs were required. They say this was not honoured.

They also say that at the time Blinkbox was sold, it had £3.5 million ($7.4 million) in the bank. Within five months, it was insolvent and defaulted on substantial debts including those to record labels.

Paul Jennings, partner at city law firm Bates Wells Braithwaite, who represents 80 in the lawsuit said: “Nearly 100 staff were dismissed without any warning and without any notice or redundancy payments. Many of the employees are still owed wages. For a large number of these people, including those with families and mortgages, this had a devastating impact.”

“We anticipate that there will be other claims arising from this situation. Aside from the appalling way in which these employees were treated, at the heart of this case is the data of two to three million users of the Blinkbox music service. We have no doubt that, as the case develops and the evidence emerges, customers and investors will want to understand precisely what occurred."

Guvera’s co-founder and CEO Darren Herft told BRW in July that reports that the company bought Blinkbox for £4 million were “totally incorrect.” He added, noting the confidentiality of the terms, (“It was) a “very very nominal amount – they were just about to close it down”. Blinkbox was burning through cash, and its cash reserves were used to restructure the company.

He also mentioned to BRW, “The staff that we retained were very loyal to staff that had to be made redundant – which was always the plan – so made it difficult to get anything done. It appears staff were of the view that they would all be retained, but that was never the case – even as a tech company, we couldn’t afford the burn rate.”