The ASX suspended trading in Openpay Group shares on Friday, at the buy now pay later company’s request, which reported that it has breached its loan covenants. Openpay reported that it issued a utilisation notice under its working capital facility with AH Meydan Pty Ltd. The funding amount was to have been received by January 31 but the payment was not made. This put Openpay in breach of covenants in loan agreements with its senior secured lenders. The company said in a statement on Friday that “constructive discussions are underway with the company’s senior secured lenders and a sub-committee of non-conflicted directors anticipate that negotiations with senior secured lenders will allow the company to make an announcement, ending the voluntary suspension”. Openpay is in a difficult situation. It reported a loss for A$82.4 million for the year to June 2022, following a loss of $63.1 million in 2020/21. Revenue grew from $26.3 million in 2020/21 to $34.2 million in the year to June but the employee benefit expense alone was $44.1 million, other operating expenses were $33.3 million, finance costs were $17.7 million and the receivables impairment expense was $9.4 million. Net cash used in operating activities was $81.2 million. Cash and cash equivalents on the balance sheet fell from $52.1 million in 2020/21 to $10.3 million at June 30. The company had a net liability of $14.9 million, making it technically, or balance sheet, insolvent. In September, it reported that it had rolled over two of three debt facilities but its future remained uncertain with its biggest facility still under review.  A $10 million working capital facility maturing in October 2022 was extended to October this year, with the facility increased by $2.5 million. A $30 million corporate debt facility maturing in October 2022 was extended until July this year. In November, the company reported that the third facility – a $55 million receivables funding facility provided by GCI Commercial Finance and Fortress Investment Group - had been extended to $110 million. It appeared that, despite its heavy losses, Openpay had the support of its funding partners. Last week’s disclosure casts doubt on that.