Honestbee gets 30-day extension to its reprieve from creditors

Honestbee, which had applied for a six-month moratorium on Aug 1, owes its 20 largest unsecured financial and trade creditors in excess of $277 million, according to an affidavit filed on Aug 22, 2019.
Honestbee, which had applied for a six-month moratorium on Aug 1, owes its 20 largest unsecured financial and trade creditors in excess of $277 million, according to an affidavit filed on Aug 22, 2019.PHOTO: ST FILE

Local grocery start-up Honestbee was granted a 30-day extension to its reprieve from creditors by the High Court yesterday as the company looks to restructure its debt.

The firm was granted an automatic 30-day court protection when it filed for a six-month debt moratorium on Aug 1.

Yesterday's 30-day extension gives Honestbee until Oct 4 to present the court with its proposed scheme of arrangement.

Chief executive Ong Lay Ann said its inability to get a six-month moratorium granted yesterday was because several creditors opposed the application.

"For us to restructure the company, given the number of creditors and complexity of the case, 30 days is insufficient," added Mr Ong.

He said that at least four to six months would be required for Honestbee to manage its creditors and propose a viable scheme of arrangement.

The firm owes its 20 largest unsecured financial and trade creditors over $277 million, noted an affidavit filed last Thursday. This corrected the list in its Aug 1 application.

Court documents show that some creditors, including a Mr Benjamin Lim Jia-Rong and LHN Space Resources, have filed affidavits to oppose Honestbee's application for a debt moratorium.

 
 
 

LHN Space Resources is the landlord of Honestbee's Habitat premises at 34 Boon Leat Terrace.

Mr Lim is owed $3.8 million, while LHN Space Resources is due a payment of around $91,000, according to the affidavit filed by Mr Ong on behalf of Honestbee last Thursday.

LHN Space Resources is also holding a security deposit of nearly $490,000, the filing noted.

Financial and trade creditors accounting for about 85 per cent of the company's debt have indicated their support for the debt moratorium, Mr Ong noted.

He believes the moratorium is the best option for creditors as they would not be able to get their money back if the firm is liquidated.

Honestbee chairman Brian Koo is the company's only secured creditor so he would have first rights on its assets.

The firm has previously outlined that it intends to focus on Habitat's operations in its restructuring process.

Its priority for now is to compile the financial information that the court is seeking and to review its operations, Mr Ong said.

The firm's physical store, Habitat, and its payment services will continue operating as normal.

Mr Ong added that the firm is relying on capital injections from its creditors to continue operations.

Funds have been invested every week and Honestbee expects further injections to continue running the business, Mr Ong said.

The affidavit filed last Thursday said Mr Koo and Formation Group injected US$1 million (S$1.4 million) each for working capital between Aug 5 and the filing date.

The money has been used to pay salaries, rent, operating expenses and critical technological services, the filing stated.

It outlaid $850,000 for employee salaries in July with an undisclosed sum allocated for August pay.

Around $50,000 to $70,000 per week has been dedicated to operating expenses.

Mr Ong, who was appointed on July 15, told The Straits Times in an earlier interview that he and the senior management are not being paid at present.

The affidavit also noted that the firm had 12 court proceedings pending and a further 13 letters of demand have been added to the 38 already received.

A hearing for Honestbee to present the details for its moratorium application has been set for Sept 30.

A version of this article appeared in the print edition of The Straits Times on August 28, 2019, with the headline 'Honestbee gets 30-day extension to its reprieve from creditors'. Print Edition | Subscribe