The former employees of Australian streaming service Guvera are suing the company for £10 million (Australian $21.1 million). Nearly 100 former employees based in the UK are seeking damages from the streaming provider.
As The Music Network reports, the plaintiffs were former employees at the now-defunct music streaming and video-on-demand service Blinkbox, which had been owned by UK retail giant Tesco and boasted 2.8 million users.
Guvera bought the music streaming sector of the company back in January as part of its entry into the UK market, while media group Talk Talk took over the video division. Guvera reportedly put up £4 million ($8.4 million).
Blinkbox was put into administration in June. A class action lawsuit by the 100-ex Blinkbox staffers in the UK Employment Tribunal names Guvera Ltd and two of its UK-based subsidiaries.
According to the plaintiffs, after Blinkbox was sold to Guvera, both companies allegedly provided written assurance they would receive redundancy payments if cutbacks occurred. They allege this wasn’t honoured.
The suit also claims that at the time Blinkbox was sold, it had £3.5 million ($7.4 million) in the bank. Within five months, the company was insolvent and defaulted on substantial debts, including those to record labels.
“Nearly 100 staff were dismissed without any warning and without any notice or redundancy payments,” said Paul Jennings, partner at city law firm Bates Wells Braithwaite, who represents 80 in the lawsuit.
“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.”
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“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.”
Speaking to BRW in July, Guvera co-founder and CEO Darren Herft said reports Blinkbox was purchased for £4 million were “totally incorrect”, but stated it was a “very very nominal amount – they were just about to close it down”.
“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,” he told BRW. “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.”
