The parent company of SunMoon Food’s controlling shareholder has been put under voluntary bankruptcy reorganisation.
This has raised uncertainties if the SGX listed company can promptly collect back some $12.4 million in account receivables due from its parent company and related entities.
In an SGX filing just past midnight on Oct 12, the company said that “on or around late Friday evening (Oct 9 2020)” it became aware that Shanghai Yiguo E-Commerce, Shanghai Winchain Supply Chain Management and Shanghai Exfresh Logistic, collectively known as the three Yiguo entities, were placed into voluntary bankruptcy reorganisation under Chinese law back in July 30 2020.
Shanghai Yiguo E-Commerce, one of the three entities, is the ultimate holding company of Yiguo General Food, which, in turn, holds 59.9% of SunMoon Food.
Back in Oct 2016 Shanghai Yiguo E-Commerce, which runs e-commerce site that focuses on foodstuffs yiguo.com, took control of SunMoon Food.
Under deputy chairman Gary Loh, the company had reinvented itself from a fruit plantation company into a foodstuff supply chain operator.
See also: SunMoon former chairman Loh sells shares, Golden Agri-Resources ID Lew buys shares
In Aug 2017, Shanghai Yiguo received US$300 million from China’s internet giant Alibaba, spurring optimism that SunMoon Food can thus benefit from the association and for supplying produce to yiguo.com.
According to SunMoon’s SGX filing on Oct 12, as at June 30 2020, its total account receivables was some $13.2 million, out of which, the bulk, or $12.4 million were due from the three Yiguo entities that have filed for bankruptcy protection.
In addition, SunMoon Food’s board understands that the deadline to file the creditors’ proof of debt in respect of the bankruptcy reorganisation is merely a week later on Oct 19 2020.
SunMoon Food has formed an “executive committee” consisting of directors, chairman James Prideaux, Loh, Ng Bie Tjin@Djuniarti Intan and Yang Guang to deal with the situation.
According to a separate SGX filing on Oct 10, First Alverstone Capital an entity controlled by SunMoon Food’s former controlling shareholder, Loh, sold 1,400,000 shares into the open market on Oct 8 for $55,118.94.
In the same filing, another 600,000 shares were sold by Loh for $23,346.82 on Oct 9.
SunMoon Food’s shareholders have earlier expressed concern of the ageing of the account receivables. As at March 31 2020, gross trade receivables due from Yiguo Group of $2.7 million are aged more than 365 days.
As at 10.48 am, SunMoon Food shares dropped 12.5% to 3.5 cents.
