Over 100 employees from Singaporean hospitality group Tipsy Collective allegedly did not receive their October salaries, hinting at the company’s potential financial mismanagement.
According to a report by The Straits Times, an internal memo was sent to employees on November 6, 2024, one day after payday, where they attributed the salary delay to “a temporary adjustment in financial scheduling.”
Tipsy Collective’s Human Resource Manager, Avril Lim, assured staff in the note that efforts are underway to resolve the issue and that payments should be made “over the next few days.”
Established in 2019, Tipsy Collective operates ten restaurants and bars in Singapore and one in Kuala Lumpur. Its recognisable brands include Tipsy Unicorn and Tipsy Flamingo.
The news of salary delays comes amid the company’s ongoing legal battle between its co-founder and shareholders, which began in August.
The company’s ongoing legal dispute
A September article published by The Straits Times reported that co-founder David Gan filed a lawsuit against eight parties, including shareholders and investors, accusing them of breaching a shareholders’ agreement and attempting to take control of the company.
According to the report, Gan sought a temporary injunction to retain control of the board, but the High Court denied the request on October 15, allowing the majority shareholders to appoint new directors.
The board eventually dismissed Gan as CEO on November 6, although he remains one of the three company directors. A representative of the new management also told the publication that the company’s corporate secretary at the time was terminated.
When asked about immediate actions to stabilise the company’s finances and operations, a representative cited limited access to company data, reportedly withheld by Gan, as an obstacle.
They have also added that the new board is made aware that employees have not received their salaries. However, they cannot verify financial information or the number of employees 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.
Gan, who told The Straits Times he no longer has an active role in management, stated that he had “directed the finance team to prioritise payroll” before his dismissal.
The team is working hard to ensure that everyone gets paid as soon as possible. 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.
David Gan, co-founder of Tipsy Collective
The recent payroll delay follows other financial concerns raised by majority shareholders.
In court documents, the defendants claimed they were troubled by alleged financial mismanagement under Gan and the late co-founder Derek Ong, who passed away in August 2023.
The shareholders objected to developing projects such as Tipsy Unicorn, a 19,000-square-foot beach club at Sentosa’s Siloso Beach, whose budget reportedly doubled from S$3 million to S$6 million.
Additional concerns included the lack of financial transparency, audit delays, and debts amounting to S$5.2 million owed to suppliers, contractors, and creditors. The company also allegedly owes about S$1 million to Sentosa Development Corporation.
Further, the defendants alleged that Gan had committed the company to loans totalling S$8.7 million from January 2021 to November 2023, with S$6 million still outstanding.
In his statement of claim filed in August, Gan shared that the defendants had attempted to remove him as a company director.
He argued that the company’s affairs are regulated by a shareholders’ agreement that provides him with veto power over board decisions. This means no significant resolutions, including the removal of directors, can be approved without his consent.
In response, the defendants disputed that his veto rights over board decisions were void following Ong’s death, as the shareholders’ agreement was predicated on both founders’ presence, where both held a majority share in the company.
Following the court ruling on October 15, the board appointed investor Reino Barack as chairman on November 6, replacing former Chief Operating Officer Reuben Low.
Employees contacted by The Straits Times declined to comment but confirmed the missed salaries and memo details.
Featured Image Credit: Tipsy Collective
