Honestbee gets 30 more days to draw up financial plans, says consumers using BeePay not affected

Despite Honestbee’s financial troubles, its chief executive officer Ong Lay Ann said that customers patronising its Habitat by Honestbee supermarket and food court located in Pasir Panjang (pictured) and those using its mobile wallet will not be affected. ― TODAY file pic
Despite Honestbee’s financial troubles, its chief executive officer Ong Lay Ann said that customers patronising its Habitat by Honestbee supermarket and food court located in Pasir Panjang (pictured) and those using its mobile wallet will not be affected. ― TODAY file pic

SINGAPORE, Aug 28 — Honestbee is trying to get its creditors to back its intention to get a reprieve from repaying its debts for the next six months, its chief executive officer Ong Lay Ann said yesterday.

If that does not work out and the firm goes into liquidation, Ong said that the online food and grocery startup will still be able to keep its high-tech supermarket Habitat by Honestbee running, and customers with credits in its Honestbee e-wallet, BeePay, will not be affected.

The firm had already asked for a six-month reprieve, or debt moratorium, from its creditors. Yesterday, the court granted it 30 more days of protection against enforcement actions and legal proceedings, so that it could provide more details such as ideas for its restructuring scheme and its financial projections, before the court considers its application for the six-month moratorium.

Ong told reporters during a conference call yesterday that the court did not grant the debt reprieve because there were objections from some creditors.

The newly minted CEO, who just joined Honestbee in mid-July, started the debt-restructuring process early this month, based on an interview he did with The Business Times

When asked whether there will be more job cuts in the firm or salaries paid late, Ong said that he would not be able to comment because he does not have “sufficient details”.  

“Those are things that, after the hearing today we need to re-evaluate the options and to work out what is the best way for us to handle the restructuring process moving forward.”

The Singapore-based e-commerce company had run into some financial troubles, chalking up debts of at least S$277 million (RM838 million), based on an affidavit that Ong filed with the court on August 22.

Frequent changes among the management team, the halting of its services in Singapore and other countries, as well as the laying off of employees made the news over the past few months.

The 30-day extension granted by the court yesterday will end on October 4. Before the deadline, the firm has to appear in court on September 30 to present its case for the six-month debt reprieve. 

Ong said that the time granted is “insufficient” to engage with all the creditors and reach an agreement with them. He is looking at at least four to six months to be a more realistic timeline. 

Restructuring ‘best’ option for creditors

Ong previously told The Business Times that there are two main groups of creditors — one comprises merchants which have worked with the firm, the other is made up of investors or what he called “financial creditors”. 

Ong believes that Honestbee’s debt restructuring plan would be the “best possible outcome for the amounts of money that is owed to (the creditors)”.

The plan has not been put down in detail yet because the firm is waiting for the court to grant them the moratorium, he said. 

He added: “The flip side of this is, if they don't agree, the company is forced into a position where we have to liquidate. And I think the liquidation scenario that we basically map out, I don’t think the creditors will be getting anything back.”

While he did not name any names, Ong said he was “surprised” by some creditors who objected to Honestbee’s application for the debt reprieve. 

The affidavit showed that some creditors are demanding about S$11 million, and there are also 12 court proceedings with other claimants for a total of S$330,000.

He did note that the three largest creditors are supportive of Honestbee’s application and have indicated their commitment to support the restructuring plan which is still in the midst of being finalised.  

These creditors are: A Honestbee (owed S$185 million), F8 Asia Growth (owed US$35 million) and Brian Koo (owed S$24.6 million). They account for 85 per cent of Honestbee’s total debt.

Ong said that these creditors are still financially supporting the firm, with the latest injection of about US$1 million of funds.

“Capital is injected periodically every other week. We still expect additional funds as part of running the normal business,” he added.

Company filings on the Accounting and Corporate Regulatory Authority showed that Koo and Yesco are among some of A Honestbee’s shareholders. Yesco is a unit of South Korean conglomerate LS Group, which was spun off from global tech firm LG and owned by the Koo family. 

F8 Asia Growth is an offshoot of venture capital firm Formation 8, which is co-founded by Mr Koo. 

No impact on customers

Despite Honestbee’s financial troubles, Ong said that customers patronising its Habitat supermarket located in Pasir Panjang and those using its mobile wallet will not be affected.

This will be the case even if the company heads towards liquidation, he said. “The plan is, in the liquidation scenario, Habitat and parts of the business will still basically (go on). We still plan to maintain and keep Habitat.”  

This is so because Honestbee’s largest creditors also happen to be its secured creditors. 

Under the Companies Act, secured creditors hold rights over the company’s property as a security for the payment of debt. 

Debts of secured creditors are also ranked higher to be cleared first before unsecured creditors, the law states.  

“(The creditors) potentially can come in and take assets of what they want at Honestbee and carry on the business as usual,” Ong explained. 

That is why it makes “more sense” for all creditors to support the company’s restructuring scheme, he added. “The alternative is that only the main creditor walks away with all the assets.” ― TODAY

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