Tipsy Collective delays employees' October salaries amid leadership reshuffle: reports

Hospitality group Tipsy Collective reportedly failed to pay employees their salaries for October in the wake of a leadership conflict within the organisation.

Over 100 employees of the hospitality group were not paid, with two staff members confirming the situation to The Straits Times.

According to the report, employees received on November 6 a memo from human resources manager Avril Lim saying the delay in salaries was due to a "temporary adjustment in financial scheduling."

Lim assured that employees can expect to get paid "over the next few days" as they carry out steps to resolve the payment issue.

Assurance of payment

The memo came on the same day that the company's board terminated Tipsy's co-founder, David Gan, as its chief executive.

Gan, who remains as one of the three directors of the Tipsy Collective, said he has directed the company's finance team to "prioritise payroll to ensure that all salary payments are processed smoothly" before his termination.

"The team is working hard to ensure that everyone gets paid as soon as possible," Gan said as quoted by The Straits Times.

A representative of the Tipsy Collective told the news outlet they were aware that some employees were not paid, but noted that they were unable to verify the information, including how many employees were impacted, due to a lack of access to the company's data.

"Currently, there is no visibility over the company's current state of affairs. We can only plan for the next steps after reviewing the current state of affairs after we are able to study through data," the representative said.

Leadership conflict at Tipsy

The company's leadership conflicts stem from a protracted legal battle involving Gan and the majority shareholders, The Straits Times reported. The dispute, which began in August, centres on allegations of financial mismanagement and an attempt by the shareholders to take control of the company.

Gan has sued eight parties, including shareholders and investors, for breaching a shareholders' agreement. He alleged that the defendants sought to remove him unlawfully and seize control of the board. According to Gan, the agreement provided him with veto power over significant board decisions, including the appointment or removal of directors.

The shareholders, however, argued that the veto power ceased to apply following the death of co-founder Derek Ong in August 2023. They claimed that the agreement was contingent upon both founders jointly holding a majority stake, a condition no longer met after Ong’s passing.

Financial disputes between the parties have also come to light, with the shareholders highlighting several alleged issues under Gan's leadership, The Straits Times reported. These include budget overruns on the $6 million Tipsy Unicorn project at Sentosa, undisclosed debts totalling $5.2 million, and loans of $8.7 million, $6 million of which remain outstanding. The company also reportedly owes Sentosa Development Corporation $1 million.

On October 15, the High Court rejected Gan's request for an interim injunction to maintain his board control. This decision allowed the majority shareholders to appoint new directors, who subsequently terminated Gan as CEO on November 6.

Following the reshuffle, Indonesian investor Reino Ramaputra Barack was appointed chairman of the board. Tipsy Collective was also named as a nominal defendant in the legal case, as the company itself will be bound by any court ruling.