SINGAPORE (THE BUSINESS TIMES) - Embattled co-living start-up Hmlet has exited Australia saddled with A$508,408 (S$520,000) in unpaid debts, an amount its administrator KordaMentha believes will increase, the Australian Financial Review (AFR) has reported.
The start-up, which walked out of seven lengthy head leases in Australia, had earlier closed its operations and applied for voluntary liquidation. Its three main landlords have been hardest hit and are owed more than A$400,000 by Hmlet Australia, said Australian Securities and Investments Commission documents.
Liquidator David Osborne from KordaMentha told AFR that parent company Hmlet Singapore had agreed to pay A$97,000 in outstanding entitlements for Hmlet Australia's five remaining staff, whose employment ended on Monday (May 31).
He also told AFR that the A$508,000 owed - mainly to creditors such as Revelop, which had four properties with Hmlet - will "inevitably" increase. This is because landlords could still file claims against Hmlet for losses incurred as a result of the disclaimed leases.
Challenged by the Covid-19 pandemic, the struggling start-up pulled out of Australia less than two years after its launch, as negotiations with landlords to restructure leases fell short, The Business Times (BT) earlier reported.
Its chief real estate officer, Mr Joshua Li, said then that Hmlet Singapore "did not face any penalties".
Hmlet had also previously lost its chief executive and many top management executives, downscaled its portfolio and faced a dwindling cash runway.
Sources told BT last month that the start-up had burned through US$38 million (S$50 million) in capital since its previous fund raise.
The firm, however, managed to snag a US$6 million lifeline from existing investors, under the premise that it needs to "cut the burn substantially", interim chief executive Peter Kennedy told BT in the middle of this month. He added that this meant the start-up had to exit markets like Australia and reduce its headcount.
Its Australia expansion had cost the company more than US$4 million, he said. Hmlet had also previously cut about 20 staff from its payroll.
Hmlet's exit has meant that it has had to terminate contracts with residents in buildings it leased. It said it has linked up existing residents with landlords so that residents can strike up a new tenancy agreement to continue their stay.
Additionally, another co-living operator, Australia-based UKO, is said to be taking over the management of several residential rental buildings abandoned by Hmlet.
UKO told AFR that it "anticipates securing management agreements with at least three former Hmlet properties" once complicated tenancy negotiations are completed.
Having left Australia, Hmlet is hoping to find its footing in its other markets - such as Singapore, Hong Kong and Tokyo.
The start-up said it is looking to expand its portfolio again, onboarding properties totalling 300 rooms and signing a new management contract.
It has also listed at least 10 new positions over the past month in upper and middle management, and in entry-level and internship roles.