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Design Studio applies for moratorium to undergo court-supervised restructuring

DESIGN Studio Group, together with five of its Singapore-incorporated subsidiaries, has made an application to the High Court in Singapore for a six-month moratorium as it seeks to undergo a court-supervised process to reorganise its liabilities.

The application for the moratorium, if successful, will prevent creditors from commencing proceedings against the group. It will also prevent any enforcement of right of re-entry of forfeiture under any lease for premises occupied by the group and the five subsidiaries, among other things.

The watch-listed group, which does kitchen and wardrobe designs for residential and hotel projects, recorded an unaudited loss of S$35.1 million for the nine-month period ended Sept 30, 2019, and an audited loss of S$26.4 million for the financial year ended Dec 31, 2018.

As at Sept 30, 2019, the group's net current assets stood at S$7.7 million. Its net assets amounted to S$29.6 million.

Design Studio said the fit-out industry in the countries and sectors where it operates has been highly competitive. The group took a hit to revenue and estimated project margins due to higher-than-expected project costs, which had adverse effects on the group.

The company has engaged AJCapital Advisory as independent financial advisers for the restructuring, and Luke Furler of AJCapital Advisory as chief restructuring officer of the group. Gibson, Dunn & Crutcher LLP are the legal advisers.

Pursuant to the Companies Act, a 30-day moratorium has come into effect from Jan 20, the date of application to the High Court. During this period, no order may be made and no resolution may be passed for the winding up of the applicant.

The five Singapore subsidiaries involved in the application are Design Studio Asia, Design Studio (China), DSG Asia Holdings, DSG Manufacturing Singapore and DSG Projects Singapore.

Design Studio also announced on Monday that three of its Malaysia-incorporated subsidiaries, namely DS Project Management, DSG Manufacturing Malaysia and DSG Projects Malaysia, have applied to High Courts in Malaysia to be placed under judicial management.

The group called for a suspension in the trading of its shares at 8.30am on Monday. The counter last traded at 8.3 Singapore cents.

On Nov 29, 2019, the company entered into a loan agreement with its controlling shareholder Depa United Group PJSC, for an unsecured loan of up to S$7.4 million to meet the working capital requirements to support the firm's ongoing operations.