Autobahn, Shariot group seek moratorium amid S$304 million debt; DBS, OCBC, UOB, car dealers among major creditors
DBS owed S$94.8 million, Teck Wei Credit, S$70 million; hearing set for Dec 2
[SINGAPORE] A group of companies that include Autobahn Rent A Car and car-sharing service Shariot have filed an application for a High Court moratorium that could prohibit winding-up resolutions, among other things, for a period of six months as they seek a scheme of arrangement. Since news of the group’s financial trouble first surfaced on Tuesday (Nov 25), the total number of companies involved has increased to 18 from nine, and total debts across the group are around S$304.2 million, up from around S$180 million.
Sanjay Kumar Rai, an appointment holder and minor shareholder in nine of the companies, on Friday applied to the High Court of Singapore for a moratorium pursuant to the Insolvency, Restructuring and Dissolution Act.
A 30-day suspension automatically came into force upon the application, but Rai had applied for a six-month moratorium. A case conference has been scheduled for Dec 2, at 9.30 am.
In his affidavit, Rai said that the group – which operates vehicle leasing, rental and fleet management businesses – is now encountering difficulties as its expansion had not been matched by demand for its services. He also cited increased operating costs.
The group intends to propose a scheme of arrangement to creditors to restructure its debts and continue its business while honouring the arrears.
Rai added that he is “confident that a scheme of arrangement is a sustainable alternative to an insolvent liquidation, as it can reverse Autobahn’s financial plight without prejudicing its creditors”.
The document also named the group’s creditors. DBS is key creditor, with the group owing the bank a total of S$94.8 million. Motor loan company Teck Wei Credit is owed S$70 million;
OCBC , UOB, Toyota Financial Services and major car dealerships Borneo Motors and Komoco Motors were also listed as creditors.
List of companies expands to 18
There are now a total of 18 companies represented in the action, including the nine originally named in the letter to creditors issued on Nov 25.
These nine companies are: Shariot, Autobahn Rent A Car, Ah Tan Car Repairs, Bayfront Autohub, Hamilton Capital, Hamilton Autohub, Hamilton Autobahn, Shinsei Rent A Car and RS Carz.
The new entities are: Hamster Car Rental, 88 Auto, WJ Car Rental, We Rent The Car, Rabbit Car Rental, Rising Sun Nippon Corporate, HJ Car Rental, Thundercarz and Rentzilla.
All are private limited companies, except for RS Carz, which is a partnership.
Rai’s affidavit said: “Each of the companies forms an integral part of the wider Autobahn group operational ecosystem, and their operations are deeply interconnected.”
It explained that enforcement against a single entity would cripple the others, as vehicles, hirers, financing lines, workshop operations, IT systems and administrative functions overlap across the group.
The group’s present difficulties came to a head when it received a cancellation notice from its fleet insurer on or around Nov 26, stating that all policies would be cancelled unless arrears were paid. The insurer also said it would notify the Land Transport Authority.
Without insurance, the group’s vehicles would be unable to operate legally, leading to “defaults under all fleet financing and hire-purchase facilities, enabling lenders to repossess vehicles, enforce mortgages, and accelerate loan obligations”.
The group also received notice that its banks were considering freezing or restricting access to operating accounts, which would cause its operations to cease and trigger “multiple defaults”.
This, the affidavit said, would result in devastating consequences and “undermine the proposed restructuring”.
The group “significantly expanded” its fleet after the Covid-19 pandemic as it had anticipated an increase in demand, but this did not materialise. It was also saddled with rising costs over time.
“(Certificate of Entitlement) premiums increased, insurance premiums escalated, maintenance costs rose, and inflation affected parts, labour and workshop operations,” the affidavit said.
Most debt from fleet expansion
DBS is owed a total of around S$94.8 million from eight of the companies, while Eazy Insurance is a creditor of 12 of the companies, and it is owed about S$1.8 million in total.
Most of the group’s debt was incurred by Autobahn Rent A Car, which is understood to have a fleet of around 1,700 cars.
A significant portion of Autobahn Rent A Car’s debt was for the hire-purchase of vehicles, including the S$70 million owed to Teck Wei Credit. It owes S$54.2 million to DBS for working capital, hire-purchase, property and trade financing.
Autobahn’s other hire-purchase debts include S$22.8 million to auto group Motorway, S$9.8 million to Privilege Motors, S$8.6 million to OCBC, S$2.7 million to HL Bank, and S$2 million to Hong Leong Finance.
The company also owes UOB S$9.4 million.
Two major car dealerships are also creditors, both for car-purchase loans. Autobahn owes authorised Toyota dealer Borneo Motors S$7.2 million, and authorised Hyundai dealer Komoco Motors, S$2 million. Toyota Financial Services, an arm of Toyota Motor Corporation, is owed S$25 million by Shinsei Rent a Car.
The group owns multiple properties, including a building at 459 MacPherson Road, three units at 1 Kampong Ampat, and one unit each at 53 Ubi Avenue 1 and 25 Kaki Bukit Road 4.
The affidavit also stated that Tan Boon Kee, the majority shareholder and director of the original nine companies who is also known as Roy Tan, is prepared to sell his personal property – a semi-detached house at Carisbooke Grove – to support the scheme.
It added that the group is in “advanced discussions with a potential investor or ‘white knight’” who may participate in the restructuring. Rai did not name the investor, citing confidentiality obligations, but said he could file a sealed affidavit to give the court more information.
Don Ho and David Ho of DHA+ Public Accounting Corporation have been appointed as the group’s joint and several scheme managers.
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