Hmlet walks out of Australia with A$508,000 of unpaid debts

EMBATTLED co-living startup Hmlet has exited Australia saddled with A$508,408 (S$519,899) in unpaid debts, an amount its administrator KordaMentha believes will increase, the Australian Financial Review (AFR) has reported.

The startup, which walked out of seven lengthy head leases in Australia, had earlier closed its operations and applied for voluntary liquidation. Its three main landlords have been hardest hit and are owed more than A$400,000 by Hmlet Australia, said Australian Securities and Investment Commission documents.

Liquidator David Osborne from KordaMentha told AFR that Hmlet Singapore had agreed to pay A$97,000 in outstanding entitlements for Hmlet Australia’s five remaining staff, whose employment ended on Monday. 

He also told AFR that the A$508,000 owed  - mainly to creditors such as Revelop, which had four properties with Hmlet - will "inevitably" increase.This is because landlords could still file claims against Hmlet for losses incurred as a result of the disclaimed leases.

Challenged by the pandemic, the struggling startup pulled out of Australia less than two years after its launch, as negotiations with landlords to restructure leases fell short, The Business Times (BT) earlier reported. Its chief real estate officer Joshua Li said then that the parent company, Hmlet Singapore, "did not face any penalties".

Hmlet had also previously lost its chief executive and many top management executives, downscaled its portfolio and faced a dwindling cash runway.

A NEWSLETTER FOR YOU

Monday, 3.30 pm

Garage

The hottest news on all things startup and tech to kickstart your week.

Sign Up

Sources told BT in April that the startup had burnt through US$38 million in capital since its previous fundraise. 

It however managed to snag a US$6 million lifeline from existing investors, under the premise that it needs to "cut the burn substantially", interim chief executive Peter Kennedy told BT in mid-May. He added that this meant the startup had to exit markets like Australia, and reduce its headcount.

Its Australia expansion had cost the company more than US$4 million, he said. Hmlet had also previously cut about 20 staff from its payroll.

Hmlet’s exit has meant that it has had to terminate contracts with residents in buildings it leased. It said it has linked up existing residents with landlords so that residents can strike up a new tenancy agreement to continue their stay.

Additionally, another co-living operator, Australia-based UKO, is said to be taking over the management of several residential rental buildings abandoned by Hmlet.

UKO told AFR that it “anticipates securing management agreements with at least three former Hmlet properties” once complicated tenancy negotiations are completed.

Having left Australia, Hmlet is hoping to find its footing in its other markets - Singapore, Hong Kong and Tokyo. The startup said it is looking to expand its portfolio again, onboarding properties totalling 300 rooms and signing a new management contract. It has also listed at least 10 new positions over the past month in upper and middle management, and in entry-level and internship roles.

READ MORE: 

• Hmlet: a hard lesson in hubris

• Co-living startup Hmlet loses CEO; hit by senior management exodus

• Hmlet backs out of Malaysia, Thailand less than six months after launch

• Hmlet lays off about 20% more staff amid financial woes

• Hmlet bags US$6m injection from investors in a 'down round' for turnaround; exits Australia