The dark days aren’t over yet for troubled firm Honestbee.
Earlier on August 1, the homegrown startup applied for a six-month moratorium and was later granted a 30-day extension to October 4 as it looks to restructure its debt.
The firm has an extensive list of creditors, which include Amazon Web Services, Google Asia Pacific, Formation Group, Shopback, and Prime Supermarket, among others.
Formation Group is a key backer of Honestbee, and has since invested USD 25 million in the company. South Korean Brian Koo, whose family controls tech giant LG, is the general partner of Formation Group.
Brian Koo resigns from the board
Koo served as Honestbee’s interim CEO after co-founder Joel Sng stepped down in May 2019.
Ong Lay Ann later took over as the company’s new CEO in July, and Koo has since assumed the role of Honestbee’s chairman.
According to an affidavit filed in court on September 20, Koo has resigned from the board on September 12.
The filing stated that Koo had “intended to step down from both the management of the company and its board” after it hired a “restructuring specialist who would be able to successfully restructure the company and set it on a trajectory to profitability.”
It also noted that Koo and associates are owed around SGD 258 million, which is almost 90% of the company’s debt.
Two days before his resignation, Koo invested a further USD 650,000 (SGD 895,000) in the firm.
Most of this capital, along with another USD 2 million investment by Koo and Formation Group, has been used for day-to-day business operations, according to The Business Times.
In the filing, Honestbee said it has secured funding to pay off its “small creditors”, who are owed USD 500 or less.
According to the firm, 1,140 of these small creditors are due to receive a total of about USD 165,000.
Another 166 creditors, who are owed between USD 500 and up to USD 1,000, are due to be paid around USD 116,000.
After excluding payments to small creditors, Honestbee has an outstanding debt of USD 286 million, according to the affidavit.
Honestbee Still Owes Ex-Employees Salary
In August, Vulcan Post reported that honestbee has received new funds but it was still “insufficient” to pay the salaries of all its Singapore headcount, according to an e-mail sent out by its HR.
As such, Honestbee’s senior management had to forego their July pay and their salaries were channeled towards paying current employees instead.
Honestbee also said that it expects to receive the second round of funding by end August, which will be used to pay the salaries of all ex-employees.
However, the aforementioned affidavit revealed that the firm is still in the midst of paying its 217 former employees, who are owed July and August salaries amounting to SGD 987,995.46.
Some of these employees have filed claims with the Tripartite Alliance for Dispute Management (TADM).
In response, an Honestbee spokesperson told The Business Times that the company “will be, if not already, in active discussions with staff in relation to a feasible payment schedule.”
TADM will monitor and enforce the payment schedule, while the Ministry of Manpower will closely observe Honestbee to ensure that employees are paid on time.
As part of its cost-cutting measures, Honestbee has reduced its headcount to 190 employees.
Earlier in January, Honestbee had 523 full-time and 77 part-time employees in Singapore.
This article first appeared on Vulcan Post.
