A group of investors involved with the recent headline-making restaurant brand Mon Hue have initiated legal proceedings against the restaurant chain’s founders after the company was forced to shut down several of its outlets over the past few days.
The group includes ADV Partners, AIF Capital, F&H Fenghe, Fortress Investments, Gryphus Capital, and Welkin Capital, all representatives of several other international private equity funds that have invested more than US$70 million since 2013 into Huy Vietnam – the parent company of Nha hang Mon Hue Ltd, Mon Hue’s operator.
Founded in 2006, Huy Vietnam’s mission has been to become one of the largest self-managed food and beverage companies in the Southeast Asian country.
The company has since expanded its business to include more than 200 restaurants in Vietnam, with Mon Hue being the oldest of its nine restaurant brands and accounting for half of its outlets.
In 2016, Huy Vietnam became a 100-percent foreign-invested enterprise after successfully raising sufficient funds from foreign investors.
The company’s most recent registration certificate shows that Ho Chi Minh City-based Huy Vietnam is currently wholly owned by Huy Vietnam Ltd. Hong Kong.
|A Mon Hue restaurant on Nguyen Van Troi Street, Phu Nhuan District in Ho Chi Minh City is closed on October 22, 2019. Photo: Duyen Phan / Tuoi Tre|
The group of investors filed a lawsuit against Huy Vietnam with the Ho Chi Minh City People's Court for illegally maintaining control over large amounts of cash and property on Thursday, days after a handful of Mon Hue restaurants in Ho Chi Minh City suddenly ceased operation.
The investors claimed that the en-masse shutdown of Mon Hue restaurants happened without neither their approval nor reasonable commercial purpose, resulting in the unemployment of more than 1,500 Vietnamese employees.
Additionally, the investors were also able to successfully lobby overseas authorities to freeze foreign accounts linked to one the company’s founders – Huy Nhat and Ngo Thi My Hanh, due to violatation in fund management, performing unusual transactions, and showing signs of fraudulence.
The group also said that Huy Nhat provided them with a fake 2018 financial report which falsely showed that the restaurant business was expanding and profiting while, in reality, Nha hang Mon Hue Vietnam Ltd. accumulated a loss of nearly VND107 billion ($4.6 million) that year.
|A Mon Hue restaurant on Hai Ba Trung Street in District 1, Ho Chi Minh City, is closed on October 22, 2019. Photo: Duyen Phan / Tuoi Tre|
Moreover, the National Business Registration Portal shows that a man born in 1985 named Nguyen Quynh Anh has replaced Huy Nhat as the legal representative of Ho Chi Minh City-based Huy Vietnam since early October 2019.
Huy Nhat and Ngo Thi My Hanh both seem to have gone off the grid and are unreachable.
“Although we were very disappointed to begin legal proceedings, our investor group hopes Vietnamese courts will be able to resolve the case in a quick and fair fashion similar to the way overseas jurisdiction agencies issued the property freeze,” said one of the group’s representatives.
On Tuesday, about 20 Mon Hue suppliers also filed a denunciation with the police in Co Giang Ward, District 1, Ho Chi Minh City where Huy Vietnam’s headquarters is located.
According to the group of suppliers, Huy Vietnam owes tens of billions of Vietnamese dongs (VND1 billion = $43,000) to more than 100 providers.