Knoma Limited - Case Update

The joint administrators of an FCA-registered entity that provided interest-free loans to consumers for educational purposes have revealed how the company got its start and what led to its collapse.

Knoma Limited was incorporated in 2018 for the sole purpose of granting loans for educational courses. The company’s executive director, Brett Shanley, had established a similar startup in Australia and incorporated the company to emulate the same within the UK market. At the start of 2019, pre-seed investment fundraising enabled the company to assemble a small team and start trading.

The company secured a £20 million debt facility agreement with Fasanara Investments S.A. and, by the start of 2022, was working with over 250 educational institutions and processing thousands of loan applications every month.

In Q4 2022, the fintech industry faced some difficulties due to the sudden increase in inflation and interest rates. The company made redundancies, reducing its workforce by half, and implemented cost cutting measures. This proved to be effective, as sufficient working capital was available and steady growth was documented throughout 2023.

Unfortunately, a subsequent round of fundraising was not successful and the company was unable to reach agreements with Fasanara and TVC Momentum Fund, another one of its lenders. Knoma proceeded to make further redundancies, operating a skeleton staff, and stopped taking in new customers.

In order to preserve the value in the loan book (approximately £1 million), Fasanara and TVC agreed to provide a secured loan to cover the company’s working capital of £300k, permitting continued loan collections to be carried out. Mr. Shanley marketed the business to prospective buyers but a deal was not able to be reached.

In May 2024, an unsecured creditor issued a letter before action. With increasing pressure from key suppliers and the impending possibility of a winding up petition, it was concluded that administration was the best option.

Adam Stephens and Martyn Ewing of Evelyn Partners were appointed joint administrators on 8 July. All remaining employees have been retained, and the administrators’ strategy is to continue to trade the company by way of collecting the loan book.

The joint administrators’ proposals can be accessed HERE. They have been assisted by Spencer West.