THE Singapore High Court on Nov 11 ordered beleaguered online marketplace Qoo10 to be wound up and for liquidators from AAG Corporate Advisory to take over management of the insolvent company.
This comes after Korea Culture Promotion (KCP), which operates culture portal sites and issues culture gift certificates in South Korea, sought to wind up Qoo10 over nearly 76 billion won (S$72.4 million) in unpaid debt.
Describing itself as one of Qoo10’s “many merchants left high and dry”, KCP alleged that Qoo10 had defaulted on 5.8 billion won in payments for gift certificates, according to court papers seen by The Straits Times.
KCP also claims Qoo10 refused to honour its guarantees to secure more than 70 billion won in debt from its two e-commerce platform units, Tmon and WeMakePrice.
Both Qoo10 subsidiaries have filed for corporate rehabilitation in the Seoul Bankruptcy Court, after failing to make payments to merchants using their platforms since early July 2024.
In addition, six other creditors, including SCI Ecommerce, 21st Century Healthcare, Mister Mobile Trading and Shenzhen Lanmey Industries – which are together owed sums of S$3.26 million and more than US$381,000 – notified the court that they supported KCP’s winding-up application.
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Qoo10’s lawyer Luke Netto disputed KCP’s claims but took no issue with the claims made by the other creditors.
The court allowed 21st Century Healthcare, which said it is owed S$954,115, to replace KCP as the claimant.
Two other entities – Qoo10 creditor Monalisa IV SCSP, allegedly owed one billion won; and corporate receiver Kroll, which allegedly holds more than 21.4 million Qoo10 shares as security – had also asked the court to adjourn the winding-up application hearing.
Monalisa wanted more time to review the winding-up papers, while Kroll wanted to assess the implications of the proceedings on the receivership.
In objecting to the adjournment, KCP’s lawyer Chua Beng Chye, who is Rajah & Tann’s deputy head of restructuring and insolvency, said there is an “urgent need to empower a liquidator” to investigate Qoo10’s affairs.
He cited “strong indications of wrongdoing by Qoo10’s management which had resulted in its financial woes”.
Chua said there was a need to protect the public, pointing out that the firm was “clearly drowning in debt without any ability to repay”.
“It is absolutely audacious it is still operating its online e-commerce platform. On the website, it is still promoting and selling products on sale, hoping to lure unwary vendors and customers. Nothing on its website says MAS (Monetary Authority of Singapore) has suspended its payment services,” he said.
Justice Aidan Xu denied the adjournment request.
He found that Qoo10 was insolvent and allowed Abuthahir Abdul Gafoor and Yessica Budiman of AAG Corporate Advisory to be appointed liquidators.
The court hearing comes as mounting claims from Qoo10’s unpaid vendors triggered investigations by the authorities in both Singapore and South Korea.
The South Korean authorities are investigating Qoo10, its founder and chief executive Ku Young-bae, Tmon and WeMakePrice for misuse of funds, fraud and embezzlement amounting to about 1.4 trillion won, KCP said.
MAS has suspended Qoo10’s payment services since Sep 23, due to outstanding payments to its merchants, and police here are investigating Qoo10 over payment delays to the vendors.
But Qoo10 has downplayed this as “simple investigations”.
In addition, the sudden resignation of all of Qoo10’s board of directors as at Oct 1, except for Ku, fuels the suspicion of corporate wrongdoing, Chua said.
Other signs of Qoo10’s insolvency include its reported retrenchment of more than 90 of its 110 employees at its Singapore office since mid-August due to cash flow issues, and numerous complaints on Google that Qoo10 had failed to complete orders placed by customers or make payments to sellers.
Lawyers for some creditors say they have been having problems delivering statutory demands for payment to Qoo10’s office at The Gateway West.
Meanwhile, Qoo10 in court papers claimed that the sales agreement with KCP and guarantees were not authorised, and therefore not binding, and that it owed just 1.41 million won to KCP.
One point of contention is the use of a “circle chop”, or representative director stamp, used to sign off on documents.
Qoo10 claimed that two senior management executives, Lee Shi-joon and Hee Jin-koo, had not been authorised to use the chop on sales agreements and guarantees. Qoo10 also alleged they did not raise these matters to the company for approval, but KCP countered that Qoo10’s claims are “mere afterthoughts cooked up to evade its liabilities”.
KCP pointed out that prior to the 5.8 billion won sales agreement, both parties had entered into 19 other sales agreements containing similar terms. Chua pointed out that these 19 agreements amounted to the equivalent of S$100 million.
“It is not disputed that the circle chop had been affixed on the past agreements and Qoo10 had honoured and performed its obligations… and had never raised any issues in these previous transactions,” the vendor said.
Qoo10 claimed that it was “not a party at any point in time” to the sales agreements with Tmon and WeMakePrice, and neither it nor its legal and compliance department had seen those guarantees.
KCP added that under South Korean law, it is a serious criminal offence for Qoo10’s employees to use the circle chop without due authority.
“There is no reason why any staff would risk criminal sanction by misusing the circle chop when there is no financial or other personal gain,” it said.
It added that it would have stopped supplying gift certificates to Tmon and WeMakePrice by early 2024 had Qoo10 not executed the guarantees as security. THE STRAITS TIMES
