Foreign investors of the loss-making Vietnamese food chain Mon Hue have claimed that some US$80 million has disappeared from the firm’s bank accounts.
A Mon Hue outlet suspends operations. Foreign investors in the debt-burdened Vietnamese food chain have claimed that some US$80 million has disappeared from the firm’s bank accounts – PHOTO: VOV
Working with local banks, the group of investors has announced legal action against the chief founder and chairman of the food chain, Huy Nhat. The missing US$80-million sum was revealed to the investors by the executive prior to July 2019.
“This (money withdrawal), coupled with the collapse of the company in October 2019, clearly show signs of fraud and capital appropriation,” alleged the investors, adding that they had injected more than US$70 million into the food chain between 2013 and 2017.
In a related development, the HCMC Tax Department stated that Mon Hue Restaurant Co., Ltd, is no longer operational at its headquarters in District 3, and the company has yet to pay VND50 million (US$2,150) in tax arrears.
The municipal taxman has already taken tax enforcement steps, but the company’s bank accounts are empty, according to a VnExpress report.
On October 21, dozens of material suppliers for the food chain gathered outside the headquarters of Huy Vietnam Group Ltd, the holding company of Mon Hue Restaurant Co., Ltd, in HCMC, seeking the repayment of debts worth tens of billions of Vietnamese dong.
Meanwhile, the group of private equity investors, including ADV Partners, AIF Capital, F&H Fenghe, Fortress Investments, Gryphus Capital and Welkin Capital, claimed in a statement later that they had started legal action at the HCMC People’s Court, on behalf of the business, against Huy Nhat.
His associates, including Ngo Thi My Hanh, managing director of Mon Hue Restaurant Co., Ltd, are also accused of breaches of fiduciary duty, irregular transactions and fraud, while Huy Nhat is said to have siphoned off large sums of cash and assets.
The move came after a handful of Mon Hue outlets in HCMC were suddenly shuttered.
The investors claimed that the shutdown of restaurants transpired without their approval or for any reasonable commercial purpose, resulting in more than 1,500 Vietnamese employees losing their jobs.
Moreover, the investors have been able to successfully lobby overseas authorities to freeze foreign accounts linked to the company’s founders, Nhat and Hanh, who were reportedly unreachable.
The group also pointed out that Nhat had given them a falsified 2018 financial report that claimed the restaurant business was expanding and making a profit. However, Mon Hue Restaurant had suffered a loss of nearly VND107 billion (US$4.6 million) that year.
Since its establishment in 2006, Huy Vietnam has become one of the largest food and beverage firms in the country. It is known as a wholly foreign-owned enterprise, with charter capital of VND600 billion as of April.
“While the investor group is disappointed over having to take these steps, it hopes for a swift and fair resolution in the Vietnamese courts, in line with the freezing injunctions already obtained overseas,” the group said in its statement.
“These steps, taken to protect the business as well as the investor group’s investment in Huy Vietnam, are in the best interests of the business’ staff, suppliers and business partners, as the investor group attempts to restore continuity to the business,” they stressed. SGT
The closure of much of the Mon Hue chain has demonstrated the risk that food and beverage businesses can suffer from, as the collapse cements that attracting investment funds does not equal an ability to balance the books.
A woman who introduced herself as an investor of Huy Viet Nam, the company that owns Mon Hue restaurant chain, wants to buy Mon Hue to revive the unprofitable chain.