JONES the Grocer's operations in Singapore have been sold to majority shareholder L Capital Asia, the equity arm of luxury group LVMH Moet Hennessy Louis Vuitton.
Fresh Bay Investments, an investment portfolio company of the equity arm, has bought the chain's outlets at Dempsey Hill and Mandarin Gallery, as well as the current payroll of staff and the Singapore franchise rights, without the debt.
It declined to reveal how much it paid for the business.
"We know the asset best, and we are in the best place to rebuild the brand," said L Capital Asia managing partner Ravi Thakran, confirming the sale yesterday.
The gourmet grocer's Singapore arm, Jones the Grocer International (JTGI) - 63 per cent owned by L Capital Asia -was placed under judicial management in March. This is a process during which an external manager is appointed to manage a company that cannot pay its debts.
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By then, it had about $19 million in total liabilities, of which about $4.8 million was owed to third parties like suppliers.
JTGI's parent, Jones Group Holdings in Australia, went into administration last December. Fresh Bay Investments bought that company back in April.
The move in Singapore, however, has angered some creditors who see it as a way for the company to write off its debt. The figure to be paid to creditors is set at 15 per cent of the sale proceeds.
Creditors told The Straits Times they heard about the sale only through the grapevine.
A beverage supplier, who did not want to be named, said JTGI owes it a five-figure sum. She said her company was re-evaluating whether to continue supplying products to Jones.
"L Capital should pay creditors back in full. If they don't, I doubt they will continue to get support from many of us," she said.
Mr Thakran said the management of creditors is done by the judicial manager, not L Capital.
At a creditors' meeting in April, a majority voted for a sale instead of liquidation.
PwC Singapore's business recovery services leader Goh Thien Phong, JTGI's judicial manager, did not comment.
Mr Abuthahir Abdul Gafoor, executive director of accounting firm Stone Forest Corporate Advisory, said that because JTGI is a private limited company, shareholders are not personally held responsible in cases of a genuine business loss.
"It's a genuine business loss unless you can prove otherwise. Jones the Grocer will be starting on a clean slate," he said.
"If the business could not be sold, then the judicial manager would have had to go back to court to recommend winding up the company."
He added: "If you wind it up, you are going to sell knives and plates. What kind of returns would creditors get then?"
L Capital plans to renovate the two outlets here to "make them sharper", said Mr Thakran. It also plans to expand the number of Jones outlets in Singapore "to a couple of iconic locations".
This article was first published on June 10, 2015.
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