honestbee Saga Hasn’t Ended As It Still Owes Money to Ex-Employees & Vendors

Last Updated on 2023-05-30 , 10:07 am

No one likes to be owed money, especially when such money is due to you after you have provided labour or services to the other party.

Unfortunately, there are some instances where a company goes bust and cannot pay its employees or vendors.

This is the grim reality that honestbee ex-employees and ex-vendors face, given the start-up is being liquidated.

Here is what is happening in the latest update of the honestbee saga.

honestbee Owes Money to Ex-employees and Ex-vendors but Cannot Pay Up

Ever since honestbee started to go down in 2019, things have not looked good for its ex-employees. Back then, it was revealed that honestbee owed over $1 million in unpaid salaries to its ex-staff. While ex-employees managed to claw back a portion of the money the company owed them, it looks like a lost cause for the remaining salaries.

The death knell for ex-employees was reported by This Business Times, which mentioned that the company no longer had any money left to pay its former staff, vendors and other unsecured creditors.

While these parties may be going home with largely empty pockets, one secured creditor, Formation Group, managed to wring some money out of a practically dry company.

A secured creditor is essentially a party who has “choped” certain parts of a company’s assets. In the event that the company cannot pay the creditor back, the creditor has the first right to realise the assets it “choped” to get back some money. But there is no guarantee that the “choped” assets are worth the same amount or more than what the secured creditor lent the company.

In this instance, Formation Group realised roughly $700,000 from the start-up. But compared to the secured debt of $4 million it had against honestbee, it recovered less than 25% of what it was owed. Can this really be considered a win?

We guess some money is better than no money.

This mindset must also have been what honestbee’s liquidator, BDO, had when it clawed back a precious $720 that honestbee had paid in excess to others. This payment was related to “electrical supplies”, as The Business Times reported after analysing some of the documents related to this case.

If you are wondering whether the ex-employees, ex-vendors and other unsecured creditors managed to “chope” any of honestbee’s assets, the answer is a sad “no”.

These parties were owed money by the company but did not manage to “chope” any of the company’s assets. In other words, they did not have a claim over any of honestbee’s assets.

Hence, their debts rank lower in priority than the secured creditor’s debts. They cannot recover any money now that the company has run out of money to pay its creditors of higher priority.

One of the employees who spoke to The Business Times mentioned being owed about $8,000 in salary. The ex-employee expressed the wish to have the Ministry of Manpower (MOM) “take harsher action on the company and its directors”. But what can the MOM do if the company is out of money?

Another creditor of honestbee, a food and beverage vendor which honestbee worked with, still had a claim of $3,000 against the company and lamented that it “did not have much expectations” to recover the money even though this case was a “high-profile bankruptcy” compared to the other “smaller” businesses which have gone bankrupt.

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A Recap of What Happened to honestbee

What will happen to honestbee now?

After the recent creditors’ meeting on 18 May, the liquidator is now intending to apply to the High Court to discharge itself and finally dissolve honestbee. Once honestbee is dissolved, it will no longer exist, so all the parties that have claims against the company will no longer be able to continue the claims against the company.

This dissolution of honestbee will put a full stop to the run of honestbee as a once-successful start-up providing innovation and convenience in society.

For those of you not familiar with honestbee, it was an online grocery and food delivery start-up service. It also provided parcel delivery services for some of its customers. Laundry collection services were also offered in Singapore.

honestbee was started in 2015 and steadily did well from its inception then. It started in Singapore but began to expand abroad to locations including Hong Kong, Taiwan, Thailand, Indonesia, Malaysia, Bangkok, Philippines and Japan.

However, things gradually went south in 2019 when it was plagued with a series of issues, including cash flow problems and failed restructuring attempts.

In particular, warning signs started flashing when honestbee gradually pulled out of Thailand, the Philippines, Hong Kong, Japan and Indonesia in 2019, with its then-CEO Joel Sng (who was also a co-founder of honestbee) leaving the company. While honestbee remained operating in Singapore, it did so with a slimmer range of services offered. Its delivery service and laundry service were suspended.

There were also talks of honestbee being acquired by other companies, such as ride-sharing companies Grab and Gojek.

Throughout 2019, there were other changes to key management personnel, such as the appointment and resignation of interim CEO Brian Koo and co-founder and CTO Jonathan Low.

There was a brief glimmer of hope for honestbee in 2020 when FLK Holdings invested in honestbee to relieve cash flow tension. FLK Holdings was backed by Brian Koo and wanted to work out a scheme of arrangement for creditors of honestbee, who were, by then, losing hope in the company.

Unfortunately, that glimmer of hope was soon extinguished as the attempt to revive the company fell through.

Further down the road, COVID-19 worsened the problems faced by the company, and eventually, a creditor of honestbee, Benjamin Lim, applied to wind up the company in 2020.

Fast forwarding to 2023, we are seeing the tail-end of the winding up of honestbee.

Amongst the turbulent times faced by honestbee, there were also some not-so-honest times thrown into the mix.

The culprit? One of honestbee’s co-founders, Mr Joel Sng (who once held the position of CEO of honestbee).

Mr Sng reportedly treated honestbee’s cash coffers as his personal bank account. He used the company’s money to buy and rent properties around the world and renovate the physical offices of the company.

One of the properties that Joel Sng bought in Niseko, Japan, was allegedly worth a whopping US$1.1 million (approximately S$1.48 million).

Regarding questionable properties that honestbee rented, one of the rented units were located above honestbee’s habitat supermarket at Pasir Panjang. It allegedly cost an eye-watering $51,000 in monthly rent. The rental was unsurprisingly borne by honestbee at Mr Sng’s directions.

Mr Sng also incorporated a company called “PayNow” to develop an e-wallet solution, which entered into a share subscription and partnership agreement with honestbee. As part of the agreements, honestbee allegedly paid $1 million to PayNow in an initial payment and a further $6.4 million later on for more shares in the “PayNow” company (these shares were held by Mr Sng).

As Mr Sng was the sole director and shareholder of “PayNow”, it was likely that the payments went directly into his pocket.

And no, the company “PayNow” has no affiliation or links to the digital fund transfer service that we are now used to our local banks provide..

These were some of the many instances of “irregularities” that honestbee suffered through under the management of Mr Sng. The company eventually commenced legal action against Mr Sng for alleged breach of fiduciary duties to the company.

It seems that the only “good” thing to come out of this is that the disgraced former CEO of honestbee was eventually declared bankrupt in 2022. While it would not help to erase his wrongdoings, at least something was done to make him “pay” for his mistakes.

What do you think of this honestbee saga?