DBS, OCBC and others owed $306m by S’pore car-sharing service Shariot and related firms
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Debt from hire-purchase agreements formed the bulk of the amount owed by the group of companies including car-sharing service Shariot.
ST PHOTO: AZMI ATHNI
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- 18 related companies, including Autobahn Rent A Car and Shariot, seek a moratorium to halt creditor actions due to $305.9 million in debts.
- Debts, largely from vehicle hire-purchase agreements, affect creditors like DBS ($94.8m), Teck Wei Credit ($70m) and Toyota Financial Services ($25m).
- Fleet insurance termination threats and potential account freezes could cripple operations; the High Court will hear the application on Dec 5.
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SINGAPORE - A group of 18 related companies, including Autobahn Rent A Car and car-sharing service Shariot, have applied to the High Court for a six-month moratorium to halt creditor actions, including the repossession of assets, while they work out a proposed scheme of arrangement.
According to documents filed on Nov 28, the companies collectively owe $305.9 million to various financial institutions, businesses and government agencies.
Among the list of creditors are major banks: DBS Bank is owed $94.8 million, UOB $13.4 million, and OCBC Bank $8.6 million.
A scheme of arrangement is a court-supervised process that enables financially distressed companies to negotiate with creditors to restructure their debts and continue operating.
This comes after nine of the 18 related companies
The court application said that creditors have intensified their pressure to recover debts since the Nov 25 letter.
The application also mentioned that the group of companies were interconnected functionally and financially, adding that the various companies were formed or acquired over time as the business developed.
These companies handle different facets of the group’s automotive business, including motor workshop and repair, fleet management for ride-hailing service drivers, leasing for partner companies, and the management of multiple pools of vehicles financed under various lenders.
Among the other major creditors are auto financing firm Teck Wei Credit, which is owed $70 million; Toyota Financial Services, a subsidiary of Japanese carmaker Toyota, which is owed $25 million; and Motorway, an automotive group that also deals in vehicle financing, which is owed $22.8 million.
Most of the debts relate to vehicle hire-purchase agreements, with the remainder comprising business loans, mortgages and fees for services.
The companies also owed $186,202 in CPF contributions to the Central Provident Fund Board for September and October, as well as $125,670 to the Inland Revenue Authority of Singapore.
Toyota distributor Borneo Motors Singapore is owed $14.6 million for cars sold on credit, while Hyundai distributor Komoco Motors is owed $2 million. An insurance broker, Eazy Insurance, is owed $1.8 million.
In the Nov 28 court filing, Mr Sanjay Kumar Rai, a director of Autobahn Rent A Car, who is also a representative of the group of companies, said that its insurer, China Taiping Insurance, on Nov 26 warned that motor insurance policies would be terminated unless outstanding premiums were paid within seven days and the Land Transport Authority would be notified of the cancellation.
If the policies lapse, Mr Sanjay noted, the vehicles cannot be legally driven.
This would force the fleet to be immobilised, prompting hirers to stop making payments and finance companies to repossess vehicles.
The companies also learnt that some banks were considering freezing or restricting access to their accounts, a move which Mr Sanjay said would “cripple essential operations, including payment of insurance, maintenance, fuel, payroll and instalments”.
On Nov 27, Borneo Motors Singapore issued a letter demanding payment by Dec 3 for 165 cars that were bought by Autobahn Rent A Car and its related companies, or the unpaid cars that were registered between July and November would be repossessed.
Mr Sanjay said in the application that Komoco Motors had also demanded payment for unpaid cars.
He said the companies expanded their fleet significantly after the Covid-19 pandemic. This led to operating costs like those for insurance, maintenance and repairs rising sharply.
At the same time, he said, more hirers had failed to pay for their rentals and the cost to recover the vehicles and delays to redeploy the vehicles resulted in further losses.
These factors contributed to the companies facing cash-flow issues, to the point where lenders issued reminders and warnings of potential enforcement.
Mr Roy Tan, the majority shareholder of the companies, told The Straits Times on Nov 26 that the group’s fleet had grown from 500 to 1,700 vehicles in recent years.
The court application said the group of companies intends to propose to creditors that it restructures its debts and continue operating while honouring the debt obligations, as a sustainable alternative to an insolvent liquidation.
The group of companies has appointed DHA+ Public Accounting Corporation as the manager for the scheme of arrangement, with Fervent Chambers as its law firm to give advice on legal matters relating to its debt restructuring options.
The High Court is scheduled to hear the application on Dec 5.
