On Sunday (4 August 2019) afternoon, honestbee sent out an email to all creditors regarding its application to the Singapore High Court for a moratorium that was filed on 1 August.
An ex-honestbee vendor received the said email, and promptly shared it with Vulcan Post. It read:
Dear Sirs, honestbee Pte. Ltd. (the “Company”) intends to propose a scheme of arrangement between the Company and its creditors.
The Company has accordingly filed an application in the Singapore High Court for a moratorium under section 211B of the Companies Act in HC/OS 981/2019 on 1 August 2019.
An automatic moratorium period commences upon the filing of the application and ends on either a date that is 30 days after the date on which the application is made or the date on which the application is decided by the Court, whichever is earlier.
The email came with a 86-page long court document, which includes:
- the originating summons
- 1st affidavit of Ong Lay Ann (newly-appointed honestbee CEO) dated 1 August 2019
- registrar’s notice dated 2 August 2019 indicating that the pre-trial conference of this matter will be heard on 6 August 2019 at 9.30am
Too Many Jargon, What Do They Mean?
Firstly, what does a moratorium even mean?
Under the law, it refers to a legal authorisation to debtors to postpone payment.
A liquidator whom Vulcan Post spoke to explained further:
During this (period), no legal proceedings can be taken against (the firm) with the exception of a ‘leave of court’, meaning court permission.
So if someone wants to (take legal actions) to wind up (the firm) within the next 30 days, they can’t if (they) are under a moratorium.
This would (help) give a company in trouble some breathing space to concentrate on restructuring or rescue, instead of having to spend money and effort staving off legal actions.
Honestbee Owes Money To “Many Suppliers”
The ex-vendor, who wishes to remain anonymous, said that honestbee owes him “hundreds”.
He said that the last payout he received from them was in February, and he has stopped supplying to them since then.
He also knows “many suppliers who have varying amounts owed to them” by honestbee.
It would be nice if they paid me, but I don’t have high hopes. (Moreover), it’s too small a sum for me to chase legally. I can file a letter of demand, but drafting it would cost so much more (so I) take it as a loss.
If a fresh injection of funds doesn’t come in soon, they’ll go insolvent. Having equity in a bankrupt company is hardly what any of the creditors want.
With regards to honestbee’s app which was down since Saturday, he speculated that it could be because honestbee never paid Amazon Web Services.
In the court document, Amazon Web Services (AWS) was listed as one of the 20 largest unsecured trade creditors of honestbee.
It is owed $356,859.45 — the second largest outstanding debt in Singapore.
Meanwhile, the firm’s 20 largest unsecured financial creditors of the company are as follows:
Not much is known about ‘A Honestbee Pte Ltd’, but the court document reveals that it is controlled by Brian Koo, who is also a general partner of Formation Group.
The court document also revealed that honestbee has been served with four statutory demands, 34 letters of demands and 11 proceedings commenced against it.
In addition, honestbee had outstanding leases for 19 vans with various expiry dates from Goldbell Leasing and Think One Leasing.
It also has outstanding leases for three units in 34 Boon Leat Terrace (habitat by honestbee) and a unit at Tampines Logistics Park.
Getting Out Of The Financial Rut
In the court document, honestbee confirms that it has been “facing financial difficulties since on or around January 2019.”
In an attempt to get out of the financial rut, this is what honestbee proposed to the Court:
Honestbee has been exploring options to raise capital prior to the moratorium application. This includes discussions with Brian Koo (former interim CEO) and other parties who are willing to invest in the company.
Formation Group, for one, has invested US$25 million in the company, according to the court document.
With regards to the scheme of arrangement, honestbee tentatively plans to convert all outstanding secured debt to equity.
This would significantly reduce their debt position and allow any injection of new funds to be used to support the business going forward.
Lastly, in terms of operational restructuring, honestbee has taken up these measures:
It will continue to explore options to reduce costs to preserve liquidity.