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Unpaid migrant workers from failed start-up waiting on luxury house sales
Foreign workers employed by collapsed AI marketing start-up Metigy are waiting for more than $100,000 in unpaid wages four months after the company went under following its now-bankrupt chief executive's luxury property spending spree funded by a loan from the firm.
Australian ex-employees of Metigy, which was once feted as the next great Australian technology firm and valued at $1 billion, have been paid $1.3 million from a federal government scheme for companies that go broke without enough money to immediately cover their wage bills. And more money is coming.
Metigy co-founder David Fairfull purchased homes after taking out a $7.7 million loan from the company in November 2021.
But that scheme, called the Fair Entitlement Guarantee (FEG), does not cover the migrant workers, leaving at least six former Metigy employees owed tens of thousands of dollars.
Joe Zhu, an IT engineer who worked at Metigy for two years on a special temporary graduate visa, is owed $30,000 in unpaid wages and accrued leave.
"What sucks the most is at first I didn't know [that I didn't qualify]," he said. "On the FEG website it says you need to be a [citizen], permanent resident or on a special working visa," he said.
He initially assumed that his visa fell under that provision. But it only covers New Zealanders in Australia, excluding Zhou, who is from China.
"I would describe it as sad because I was entitled to [my pay]," he said. "I get my pay, I get my leave. I am entitled to that but I can't get that. It's annoying and sad."
"I'm not trying to criticise the government because it's a really good scheme," he added. "My thoughts are that maybe they can revise it a little bit [so that] at least we can get some part of it."
Another former employee, who did not want to be identified while their visa application is under review, is owed $80,000 in unpaid wages and leave entitlements.
Administrators have told former workers who do not qualify for the government scheme to wait for the expected income from the sales of two houses Metigy chief executive and co-founder David Fairfull purchased after taking out a $7.7 million loan from the company in November 2021. The rest of the money for the houses came from another lender.
One of the houses – a six-bedroom, four-bathroom mansion in Mosman that Fairfull purchased last year for $10.5 million – was quietly sold on Monday 21 November, but the transaction is not expected to settle until at least January. The other – a luxury estate near the Kangaroo Valley purchased for $7.7 million – is expected to be sold in early December.
The exact way the money from the houses will be divided up among Metigy's creditors and investors is not clear.
Fairfull, who has not spoken publicly since Metigy failed at the end of July, was contacted for comment. Administrators Cathro & Partners declined to comment but have confirmed to creditors that there are former employees who are not eligible for the federal entitlement guarantee.
In Australia, workers receive money from the sale of their former company's assets before other creditors. Administration documents suggest at least $1 million is owed to former Metigy staff, but the exact amount is not known, raising questions over how much money other creditors, including prominent investors Regal Funds Management and Five V Capital, will get.
The government tries to recover the money that it spends on the entitlements guarantee from failed companies. But despite several reforms to the scheme and its previous iterations over many years, it typically falls millions short of its target.
In the 2021 financial year the government estimated that it would get back $38 million but only retrieved $20 million, plus some money outside the scheme's remit, leaving the rest of the cost to taxpayers.
Kevin Davis, a professor of finance at Melbourne University who has written about the experience of migrant workers under the Fair Entitlements Guarantee, said the disparity between citizens and visa workers was unfair.
"If people are being employed by Australian companies operating under Australian law, then presumably they should be entitled to the same protection [as Australian citizens]," he said.
"Many workers from other countries have little union support and understanding of legal processes, putting them at greater risk of financial ruin."
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