Kitchen Culture clarified Monday that it hasn’t been able to find a lease agreement for the alleged rental arrears from 2016 to 2018 owed by its wholly owned subsidiary KHL Marketing (KHLM) to Kim Hup Lee & Co. for floors 1-3 of the property at 25 New Industrial Road in Singapore.
In October, Kitchen Culture said KHLM had received a statutory demand form Kim Hup Lee for S$1.77 million in alleged outstanding rental arrears. Kim Hup Lee had demanded payment, saying it would raise a statutory presumption of KLHM’s inability to pay its debts at any winding up application it may bring, Kitchen Culture had said in October.
In response to queries from SGX, Kitchen Culture said no formal lease agreement appeared to have been signed during the relevant period.
“The company had initially assumed that there were formal lease agreements signed for February 2016 to October 2018 and had written to Kim Hup Lee’s lawyers on 1 October 2021 and 5 October 2021 to request the same. However, Kim Hup Lee declined to provide copies of the lease agreements,” Kitchen Culture said.
The board consulted management to attempt to review documentary proof of the lease agreement, but “when no lease agreement for the relevant period was found, the board considered the likelihood that there was never a lease agreement signed and no board approval obtained,” Kitchen Culture said.
“To the best of the company’s knowledge, there was no formal lease agreement signed during this period,” Kitchen Culture said. But it noted there was an agreement that Kim Hup Lee would only seek payment if KHLM was in funds and able to prioritise the use of the funds.
“This agreement was borne out of the close relationship and shared interests between KHLM and Kim Hup Lee, including but not limited to the Lim family’s connections with both companies.,” the filing said.
In October, Kitchen Culture had noted that Kim Hup Lee is owned and controlled by parties related to Kitchen Culture’s Director Lim Wee Li, but Lim has said Kim Hup Lee remains separate from him and that he doesn’t have a direct interest in it.
On Monday, the company clarified that Lim’s relatives — including two siblings, three uncles and a cousin — hold around 14 percent of Kim Hup Lee. But despite Lim’s familial connections to the company, the relationship to Kim Hup Lee doesn’t appear to meet the definition of “associate” and the family members don’t have an interest of 30 percent or more, the filing noted.
Kitchen Culture said that if the alleged rental arrears were to be paid immediately, the cash outflow would reduce the company’s and KHLM’s working capital “significantly,” and may disrupt KHLM’s ongoing projects.