On 1 August 2019, Honestbee filed an application to the High Court for a moratorium.
It would prevent their creditors from taking legal action against them, basically giving the company more time to concentrate on restructuring and rescue before they had to pay off their debts.
We previously saw a list of their creditors when one of Honestbee’s former vendors revealed the court document to Vulcan Post.
An affidavit filed on 22 August later corrected that Honestbee owes its 20 largest unsecured financial and trade creditors more than $227 million.
Honestbee, which has received four statutory demands and 34 letters of demands between May and July 2019, was seeking legal protection for six months.
The High Court today (27 August 2019) has not reached a decision on Honestbee’s request, but granted them a 30-day extension to furnish additional details to support their application for the six-month moratorium.
This will be heard in court again on 30 September.
Creditors Object To Moratorium
Some of Honestbee’s creditors objected to the 6-month moratorium when newly-appointed CEO Ong Lay Ann filed the application.
Benjamin Lim Jia Rong was among a few who opposed this.
In his affidavit, Lim stated that Honestbee defaulted on their repayment due on 27 June 2019 after receiving a US$3.8 million loan from Lim.
He then went on to say Honestbee should not be granted the moratorium as “there is no reasonable prospect of [their] intended or proposed scheme working”.
These are the steps Honestbee proposed they would take:
Lim wrote that Honestbee’s “current condition and business model depict a very dim prospect even if it manages to buy itself some time”, citing their financial difficulties since January 2019 and losing their key partnership with NTUC Fairprice among a string of reasons.
He also raised that Honestbee’s three major creditors supporting the moratorium were “troubling” considering they are all “closely linked to Brian Koo”, who was appointed as Honestbee’s interim CEO for a few months.
While there were objections, eight other creditors (besides the three mentioned above) allegedly indicated support for the moratorium.
Including Mitsubishi Corporation, the supporting creditors make up about 1.9% of Honestbee’s debt.
Starting On Repayments?
Honestbee’s landlord for their habitat premises, LHN Space Resources, also opposed the moratorium.
Leases are still outstanding, and LHN was owed more than $228,000 in total.
Straits Times reported that Honestbee has begun repaying LHN “close to $115,000” of this debt, and will pay the remaining by the end of the month, according to CEO Ong Lay Ann’s affidavit on 22 August.
His filling also said the company has begun paying outstanding employee salaries, with $850,000 spent on their July salaries, and another undisclosed amount set aside for August.
Ong told ST that the company’s senior management, including himself, are not taking salaries at the moment while they prioritise paying their staff.
The monies to repay employees came from investors, including a US$25 million injection from Formation Group.
Brian Koo and Formation Group also each injected US$1 million into Honestbee between 5 August and 22 August.
Featured Image Credit: Vulcan Post