SINGAPORE - TV host Pornsak Prajakwit and his business partner, who received $2 for selling 60 per cent of their shares in the Thai restaurant chain they founded, are suing the food and beverage company that took over the business.
Mr Pornsak and Mr Foo Tuan How, who opened the first outlet of Porn's Sexy Thai Food in 2010, had agreed to give up their majority stake to Jus Delish Group in November 2016.
In court papers obtained by The Straits Times, the pair said they agreed to sell their shares for a nominal sum, as Jus Delish had agreed to inject capital of $400,000 to expand the business.
Past media reports had quoted parties in the deal as saying a seven-figure sum was involved.
The pair, each of whom now owns 20 per cent in Nine F&B, the company that owns the Porn's restaurants, have also sued Jus Delish directors Liow Tian Wah and Tan Bee Hong.
Mr Liow and Ms Tan took over as directors of Nine F&B following the sale.
Mr Pornsak and Mr Foo contend that they are being oppressed as minority shareholders and want Jus Delish to buy them out.
Jus Delish has countersued and argues it is entitled to rescind the deal and get back its investment.
At the time of the sale, there were four Porn's outlets - at Safra Mount Faber, Star Vista in Buona Vista, Alexandra Retail Centre and one in French Road operated by a franchisee.
In their lawsuit, Mr Pornsak and Mr Foo say they were told only in March last year that Nine F&B was heavily in debt.
They say they were given two options: sell their remaining shares to Jus Delish for $1, or bear the losses according to the proportion of their shareholding.
They did not agree to either. They say they found discrepancies after going through the financial documents of Nine F&B.
Their lawyers from WongPartnership sent a letter to Jus Delish, alleging breaches of the sale and purchase agreement and the shareholders' agreement, and proposed that Jus Delish buy out the pair's shares, but there was no reply.
Mr Pornsak and Mr Foo say they learnt in August last year that all outlets were closed, except for the one in Star Vista.
The pair is seeking a High Court order for Jus Delish to buy all their shares at fair value.
They contend that their rights as minority shareholders have been unfairly prejudiced by the defendants' actions.
Instead of expanding the business, the defendants mismanaged it, they say.
They allege Jus Delish failed to inject the promised funds or had withdrawn or misused most of it, a claim Jus Delish disputes.
Months after taking over, Jus Delish changed suppliers without consulting them. The pair claim this resulted in a drop in food quality and led to an increase in customers' complaints.
They say they were also not told why Nine F&B had been paying a monthly "management fee" of about $8,000 to Jus Delish.
The defendants, represented by AsiaLegal, deny the allegations.
In court papers, they contend they did inject $400,000 into the business in May 2017.
They say they were unable to expand the business owing to the plaintiffs' delay in providing properly audited accounts and failure to transfer the Porn's trademark to Nine F&B.
The closures were beyond their control, they added. For instance, one landlord did not want to renew the lease.
They also contend the change in suppliers was justified from a cost savings standpoint because it consolidates their suppliers across the group's various brands.
The group also runs Thai restaurants Som Tam, Talay Kata and Gin Khao, as well as Kwan Inn Vegetarian outlets.
Jus Delish has countersued the pair for damages and is also asking the court to declare both liable to pay it $400,000 if Nine F&B is unable to pay the sum.
It is also claiming against Mr Pornsak for breaching his contract as brand ambassador.
Jus Delish alleges that when he was approached to appear at a number of events, he would redirect such queries to his agent and asked to be paid for such engagements, despite receiving a salary as brand ambassador.