Vietnam’s “foodies” were shocked when popular Vietnamese eatery Mon Hue closes its 80+ restaurants across the country last week due to massive debts, but financial analysts and lawyers were not shocked when investors announced lawsuits against the company’s management team only a few days later.
Investors from Huy Vietnam Group Limited announced that they have initiated legal proceedings against the founders of the Mon Hue restaurant chain. The group includes multiple investors including, ADV Partners, AIF Capital, F&H Fenghe, Fortress Investments, Gryphus Capital and Welkin Capital. These companies represent international private equity funds that have invested more than $70 million USD into Huy Vietnam, Mon Hue’s parent company.
In a statement, the investors group said they had begun legal action in the People’s Court of Ho Chi Minh City on behalf of the business against its founder and chairman, Huy Nhat. Additionally, Ngo Thi My Hanh, Managing Director of Mon Hue Restaurant Co Ltd., is also being charged for alleged breaches of fiduciary duty, irregular transactions and fraud. It is alleged that Huy is said misappropriated the company’s assets including large amounts of cash and that Ngo had knowledge of Huy’s actions.
In their lawsuit, the investors claim that the shutdown of Mon Hue restaurants was executed without their approval or for reasonable commercial purpose, and that the closure of the restaurants has resulted in 1,500+ Vietnamese employees losing their jobs.
At the same time that the investors have filed suit in the People’s Court, they have also been successful in having international banks freeze foreign various bank accounts that have been linked to the company’s founders, Huy Nhat and Ngo thi My Hanh.
Since the closure of the restaurants last week, both Huy Nhat and Ngo Thi My Hanh have been unreachable to both the investor’s representatives and local media.
A key point that the investors have pointed out in their allegations of fraud is the fact that Huy provided a 2018 financial report that stated that the company was expanding and making a profit. In reality the company suffered a $4.6 million USD loss that year.
Huy Vietnam Group Limited operates the Mon Hue, Pho Ong Hung, Com Tho Chay, Great Banh Mi, Pho 99 and TPTea brands. At its peak, the company employed more than 2,500 staff nationwide, and was serving 47,000 customers per day with safe and affordable meals.
The investors group said in a prepared statement that: “While the investor group is disappointed at the need 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. These steps, taken to protect the business generally 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.”