Tipsy Collective staff go unpaid amid ongoing court battle between firm’s co-founder, shareholders

SINGAPORE – More than 100 employees of home-grown hospitality group Tipsy Collective were not paid their October salaries in what is a sign of the firm’s worsening financial mismanagement amid an ongoing legal battle between its co-founder and shareholders.

The company issued an internal memo to staff on Nov 6 – a day after staff were supposed to be paid – attributing the delay to “a temporary adjustment in financial scheduling”.

In the note, Tipsy Collective group human resource manager Avril Lim assured employees that steps are under way to resolve the payment issue and they can expect to get paid “over the next few days”.

Founded in 2019, Tipsy Collective runs 10 restaurants and bars here and one in Kuala Lumpur. The company has been embroiled in a legal battle since August.

The Straits Times reported in September

that Tipsy’s co-founder David Gan was suing eight parties, which include shareholders and investors, for breaching a shareholders’ agreement and attempting to seize control of the company.

Pending the outcome of the suit, he had tried to get an interim injunction to maintain control of the company’s board. On Oct 15, the High Court dismissed his application, which allowed the majority shareholders to elect new directors to Tipsy’s board.

On Nov 6, the company’s board terminated the role of Mr Gan as chief executive. He still remains as one of the three directors in the company. The company’s corporate secretary was also fired, said a representative of the new management.

When asked what immediate steps will be taken to ensure financial and operational stability within the company, the representative said efforts to do so are being hindered by a lack of access to the company’s data, which Mr Gan has not provided.

The representative added that the new board has been informed that employees have not received their salaries, but they are currently unable to verify financial information or how many employees are affected.

“Currently, there is no visibility over the company’s current state of affairs. We can only plan for the next steps after reviewing the current state of affairs after we are able to study through data,” the representative explained.

Mr Gan told ST he is no longer part of the management of the company and does not participate in or have sight of the company’s operations.

He said he had “directed the finance team to prioritise payroll to ensure that all salary payments are processed smoothly” before he was fired as chief executive.

“The team is working hard to ensure that everyone gets paid as soon as possible,” he said.

“I am saddened that I have been removed from the company that I founded. Nevertheless, I hope that the new management succeeds with their new ideas and the changes they intend to make. I wish the company continued success,” added Mr Gan.

Employees that ST spoke to declined comment, but two of them confirmed the unpaid salaries and content of the Nov 6 memo.

The unpaid salaries come on the heels of previous financial concerns raised by the company’s majority shareholders.

In court documents, the defendants – including Indonesian investors Reino Ramaputra Barack and Santosa Kadiman, Singaporean Rudy Hartono Widjaja and four shareholders – said they were concerned about the alleged financial mismanagement and decisions taken by Mr Gan and another co-founder, Mr Derek Ong, who died in August 2023.

The defendants said they had opposed the development of Tipsy Unicorn – a 19,000 sq ft beach club on Sentosa’s Siloso Beach – which had overrun its budget, doubling from $3 million to $6 million.

Other examples of alleged mismanagement cited include non-disclosure of financial information, failing to conduct timely audits, and debts to suppliers, contractors and creditors totalling some $5.2 million.

The company also purportedly owes Sentosa Development Corporation a separate sum of around $1 million.

The defendants also blamed Mr Gan for causing the company to take out loans amounting to $8.7 million between January 2021 and November 2023, of which $6 million is still outstanding.

Tipsy Collective was also named a nominal defendant in the suit as the company would be bound by any judgment.

In his statement of claim filed in August, Mr Gan had said the defendants had tried to remove him as a director of the company.

He argued that the company’s affairs are regulated by a shareholders’ agreement that provides him with veto power over board decisions, meaning no significant resolutions can be approved without his consent – including the removal of directors.

This was disputed by the defendants, who argued that the veto provision is no longer applicable following Mr Ong’s death as the shareholders’ agreement was premised upon the existence of the two founders, who together used to hold a majority share in the company.

After the Oct 15 court ruling, the majority shareholders replaced Tipsy’s former chief operating officer, Mr Reuben Low, on the board with Mr Barack. He was subsequently appointed as chairman of the group on Nov 6.