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honestbee loses court protection from creditors

honestbee loses court protection from creditors

Source: Business Times
Article Date: 27 Mar 2020
Author: Sharanya Pillai

With the scheme meeting application dismissed, honestbee is no longer under court protection from its creditors. This effectively opens the door to creditors to apply for a winding up order on the company.

The Singapore High Court has dismissed honestbee's application to convene a scheme meeting to restructure some US$230 million worth of debt, The Business Times has learned. This effectively opens the door to creditors to apply for a winding up order on the company.

In a closed-door hearing on Thursday, honestbee's request for a two-week adjournment was turned down by the court. The company made the application after learning that potential white knight Brian Koo may withdraw his support for the restructuring.

With the scheme meeting application dismissed, honestbee is no longer under court protection from its creditors. Its sole secured creditor is Formation Group, Mr Koo's venture firm, which has all-monies charges for US$4 million worth of loans. The distressed startup has more than 1,000 other unsecured trade and financial creditors.

honestbee's current and former staff are also understood to be owed salaries and Central Provident Fund contributions, BT had earlier reported. honestbee did not reply by press time to queries on whether these payments are still outstanding, as well as what its plans are following the court outcome, including whether it intends to appeal.

BT understands that landlord LHN Space Resources is now able to take back level 1 of 34 Boon Leat Terrace, which had housed honestbee's concept supermarket habitat. LHN had previously opposed honestbee's application for a moratorium.

With honestbee's restructuring effort effort appearing to have fallen through, this could mark the end of the road for the embattled startup after over a year of turmoil.

A key turning point was the revelation that Formation and FLK, two entities linked to Mr Koo, may no longer wish to support honestbee financially.

In an email to creditors on Wednesday, seen by BT, honestbee said that FLK and Formation were re-considering their continued support for the company due to "the worsening Covid-19 pandemic across the world and the resulting uncertainties".

Under honestbee's proposed scheme of arrangement, FLK was to have injected US$7 million into the company to repay creditors owed above S$500 each with three cents on the dollar in cash. honestbee was to have repaid the remainder of its debt via equity issuance.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

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