We have been closely tracking Jeff, the Valencia-based laundry service startup, for several years now. They were featured in our “10 Spanish Startups to watch in 2018 and beyond.” In 2019, we witnessed their successful fundraising of €10.4 million to support their expansion into more than 30 countries. Even in 2020, we received updates on their impressive €17.4 million funding round and their official launch in the US.
As many of you are aware, the startup world is filled with both highs and many lows and sometimes stories of success can take a tragic turn. Today, we must once again address the situation surrounding Jeff, but unfortunately, not with exciting news to share.
The Valencia-based startup eventually filed for bankruptcy after more than nine months of failing to pay its employees’ salaries, resulting in a reduced workforce. The Mercantile Court of Valencia has appointed an administrator to handle the proceedings since the company was unable to finalise a funding round with two international funds, despite officially announcing it months ago. The exact extent of the company’s debt is yet to be determined, but appears to be substantial, and there are rumours that their losses amount to nearly €65 million between 2020 and October 2022.
According to the Mercantile Registry, the franchise platform for laundries and other businesses initiated the voluntary bankruptcy process on May 19th, which was subsequently approved by the court and officially registered on the 26th of the previous month. The appointed bankruptcy administrator is the specialised law firm PKF Attest. Now, the company enters a phase where potential liquidation or debt reorganisation is on the table to address its accumulated liabilities.
One of the most distressing aspects of this situation appears to be the outstanding debt owed to the employees. Sources familiar with the situation stated that salaries have gone unpaid since September of the previous year when payments were suspended. The company’s management, headed by CEO Eloi Gómez, justified this delay due to the prolonged closure of the funding round. Although the company formally announced the completion of the funding round months ago, it was unable to finalise the process. Subsequently, the management team communicated various issues internally through email, ranging from renegotiating terms to complications with an investor located in the Central Bank of Dubai, which caused a halt in capital outflow.
Despite the mounting debt and obligations to employees, suppliers, and Social Security, the company initially resisted filing for bankruptcy, insisting that it was still actively pursuing the funds from the two international investors. However, the situation led to the implementation of a Collective Redundancy Procedure (ERE), resulting in the termination of employment for 103 out of the company’s 157 employees at Mr Jeff Labs SL. Unfortunately, these employees left without receiving their due compensation, further adding to the growing list of unpaid monthly salaries.
Employees have filed lawsuits for non-payment in Valencia courts and have also lodged a complaint, although it was initially rejected.
Apart from all internal challenges, the company has faced several legal problems in the markets where it operates, including Colombia, Mexico, Brazil, and Spain. Despite raising over $130 million in capital from various Spanish and international funds, such as Alma Mundi Ventures, Angels Capital (Juan Roig), All Iron Ventures, FJ Labs, and AddVenture, Jeff has been subjected to lawsuits in multiple jurisdictions during the past three years. These lawsuits primarily allege fraud, claiming that promised conditions, such as achieving profitability within a specific timeframe or generating orders through their app, were not fulfilled.
As we reflect on this situation, it is important to acknowledge the former employees of Jeff as they have displayed resilience and perseverance despite the challenging circumstances, and their unwavering loyalty should be recognised. This downfall serves as a reminder of the risks inherent in the startup ecosystem, emphasising the importance of financial planning, responsible management, and transparent communication. We stand in solidarity with the employees, hoping they find support and new opportunities to thrive, and we remain optimistic that they will emerge stronger from this difficult chapter.
Read the orginal article: https://www.eu-startups.com/2023/05/the-fall-of-jeff-bankruptcy-declaration-after-nine-months-of-unsettled-salaries/
