SINGAPORE: Flash Coffee, which opened a flagship store in Singapore two years ago, suddenly closed all its outlets in October. More details of the company’s financial troubles were brought to light on Friday morning (Nov 10) with an announcement that Flash Coffee owes its creditors as much as S$14.9 million.
This amount included salaries and contractual benefits to its employees of over S$300,000, said BDO Advisory, the company’s provisional liquidator. However, Flash Coffee’s biggest debt is to its holding company. The Singapore-based coffee chain owes Digital Services SG Four around $13.4 million.
As for its debt to employees, the Food, Drinks and Allied Workers Union said on Oct 13 that workers are owed the balance of 75 per cent of their pay for September, salaries for work until Oct 12, and the encashment for their remaining leave days. Meanwhile, some of the landlords for the coffee chain are owed amounts ranging from $80,000 to $140,000.
On Oct 12, the company filed for a voluntary winding-up. It was put under provisional liquidation, citing its inability to keep on business operations because of its liabilities, The Straits Times quotes BDO Advisory as saying.
It added that a creditors meeting was held virtually on Wednesday (Nov 8), where 18 out of the 34 creditors who attended were former Flash Coffee workers.
“Creditors were briefed of the estimated value of assets and liabilities, the steps which the liquidators will be taking to realise the assets available, and the provisions of Section 203 of the Insolvency Restructuring and Dissolution Act with particular focus on the employees’ claims,” said BDO Advisory.
It added that a Committee of Inspection was formed to help oversee Flash Coffee’s liquidation and ensure that recoveries for the stakeholders would be maximized.
The company had said via a spokesperson on Oct 13 that it was shuttering its Singapore operations to “further consolidate our future efforts and to double down on our most promising markets”.
The company has around 200 outlets in Singapore, Indonesia, Thailand, Hong Kong, and South Korea. Flash Coffee has also said that most of its office staff had been offered positions in other markets.
It opened its first store in Indonesia in 2020 and rapidly expanded across several countries after receiving an investment of US$15 million in 2021. It raised another US$50 million as recently as May of this year.
At present, it has 93 outlets in Indonesia, 82 in Thailand, 17 in Hong Kong, and seven in South Korea. The company closed outlets in Japan and Taiwan in 2022, around one year after it had begun operations in those countries. /TISG