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Creative tech firm Talenthouse faces closure due to mounting debts

By Nagasunder in UK Business News, posted April 10, 2023

The tech company which claimed to "democratize creativity" by pairing artists with design specifications for major companies is on the verge of bankruptcy after receiving a winding-up petition for unpaid obligations.

Talenthouse, whose clients have included Netflix, Coca-Cola, Nike, and the United Nations, is facing legal action from creditors in the United Kingdom and is believed to have laid off the majority of its employees including top executives also leaving its parent business.

Talenthouse AG, its parent firm, has also announced the liquidation of four additional companies, citing inability to pay overdue supplier debts and even employee compensation.

The announcement comes after months of financial turmoil. The Observer reported in February that contributors to the Talenthouse internet platform had not been paid hundreds of pounds for assignments done months before.

Some had worked on high-profile projects, such as designing posters, ad campaigns, and social media posts for DreamWorks, Nationwide, and Snapchat.

Talenthouse co-founder Roman Scharf apologised at the time, saying the company was "working on a long-term robust solution" that would benefit creatives and will be unveiled soon.

However, two months later, parent business Talenthouse AG announced a significant "restructuring," including the termination of the UK corporation through which many of the artists were signed.

Talenthouse AG, which is traded on the SIX Swiss Exchange, stated that a "strategic review" discovered "substantial outstanding liabilities" at the companies, including unpaid wages and tax payments.

"The company has decided to no longer fund these entities," it said in a statement to investors on March 21.

Many Talenthouse suppliers, contributors, and employees are out of work as a result of the announcement and facing financial difficulties.

Quantuma, a business consultancy firm that is owed money and has applied to the courts to close the company down, served a winding-up petition on Talenthouse's UK unit just days before the reorganisation was disclosed.

If liquidated, Talenthouse's UK assets would be auctioned and any proceeds distributed to individuals who are owed. However even once this process happens there is no guarantee that creditors will receive their money fast, if at all.

For contractors such as Robert Acle, 47, a Filipino artist, Talenthouse's UK business' demise is a significant blow as he claims he is owed more than £3,200 in fees

He has been seeking money for projects, including a campaign for a social network company, since last August, and he is "very concerned" that he may be out of work indefinitely.

“All I get from Talenthouse is, ‘We’re doing what we can,’ automated responses. No one really seems to care,” he said.

“It’s emotionally and mentally draining. I’m just overwhelmed by the most likely possibility that they will get away with it.”

Contributors to another subsidiary under liquidation, photo site EyeEm, are also said to be owed money by Talenthouse, while staff claim to have endured delays of over a month for salary payments in some cases.

Talenthouse, based in London, was formed with the goal of democratising creativity and levelling the playing field for artists worldwide.

On its corporate page, it urged businesses to collaborate with it because "purpose-driven brands perform better." "Raise your honesty. Virtue signalling is insufficient. "Join Talenthouse today to democratise creativity," it said.

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It has struggled financially in recent years, with insiders blaming a succession of acquisitions that drained money from the business and a broader IT sector slowdown. Staff across the organisation have been laid off in recent months, and nearly all significant executives have left.

Those who remain at Talenthouse, including co-founder Scharf, hope that some components of the business, such as the newly acquired Coolabi, which handles intellectual property for children's and family companies, will continue through separate organizations, bolstered by new investors' funding.

However, an insider said the Talenthouse platform, which was central to the business, was unlikely to continue in its current form. “The team is gutted. The management is gutted. The heart of the business is dead,” they said.

Scharf said it was “painful” to see some teams go but that Talenthouse AG was “actively working” on steps to save other parts of the business. “We are looking to safeguard as much of the business of the group as possible in these challenging times,” he said.

When asked what steps were being taken to ensure contributors and staff were paid, he did not respond. Quantuma, which initiated the legal action against Talenthouse Limited in the UK, also declined to comment.

Source: The Guardian