Singapore-headquartered on-demand delivery startup Honestbee on Tuesday announced that it has secured a one-month debt moratorium in its bid to restructure its business.
The Singapore High Court has directed the startup to provide details of a proposed scheme of arrangement — the first step in restructuring Honestbee’s debt — and said it will next hear the matter on September 30.
“The intended scheme will allow creditors to achieve a better recovery. If the moratorium is not approved, honestbee will have to review the company’s financial position and approach the various
financial creditors for an alternative bail-out package,” Honestbee said in a statement. “The liquidation option for honestbee will result in all creditors recovering little to no money.
News of the reprieve from the Singapore High Court was first reported by the Straits Times and the Business Times.
According to the Business Times, Honestbee’s creditors including landlord LHN Space Resources, trade creditor MOS Foods Singapore and financial creditor Benjamin Lim Jia-Rong are opposed to its debt moratorium application.
The report added that Honestbee owes its 20 largest unsecured creditors about S$276.6 million ($199.21 million), which is higher than previously announced estimates. It also owes key investor Formation Group $4 million, secured by an all-monies charge.
Honestbee CEO Ong Lay Ann has expressed surprise at the outcome, according to reports.
Ong told Straits Times that 30 days is “insufficient” for restructuring the company given the complexity of the case and number of creditors it has. He added that a minimum of four to six months will be required for it to deliberate over a viable scheme.
Honestbee had announced earlier this month that its three largest creditors – Singapore-registered special purpose vehicle A Honestbee, Formation Group and Honestbee’s chairman Brian Koo – had expressed support for the moratorium. The three collectively account for 77.2 per cent of Honestbee’s debt.
Eight other creditors, including Mitsubishi Corporation, have also indicated support for the moratorium, according to an affidavit seen by Straits Times. These account for 1.9 per cent of the company’s debt.
Honestbee had also added in this application that it received an expression of interest from Formation Group for an investment of up to $25 million to stay afloat. Koo and Formation Group also injected $1 million each into Honestbee as working capital between August 5 and August 22.