Creditors hound spa director at meeting

[Musicwhiz]

Twists in Subtle Senses liquidation saga

Neo Chai Chin | Dec 8, 2010 6:00 AM

Questions arise over True Spa customers' creditor status

SINGAPORE - New twists, jaw-dropping numbers and fresh disputes have emerged in Subtle Senses' liquidation, three weeks after its creditors' meeting.

The amount of unserviced packages the spa assumed by taking over True Spa's operations seems to have been $33 million - more than seven times the $4.5 million at the point of liquidation in October.

Liquidators and the Committee of Inspection (COI) overseeing them have also found that True Spa had paid only $1.25 million to transfer its operations to Subtle Senses - raising the question if Subtle Senses and its parent company had done their "homework", a COI member felt.

The five-member committee - comprising customers, a lawyer for one of Subtle Senses' landlords and an ex-staff - were surprised by the numbers. One, who declined to be named, said: "I found it very questionable."

True Spa customers had turned up for the creditors' meeting at Suntec City Mall on Nov 16 but whether they are entitled to a cut of Subtle Senses' assets is up in the air, with liquidators seeking legal advice on the issue.

Despite the transfer of operations, they "have actually signed a valid binding contract with True Spa", said one of the liquidators, Mr Abuthahir Abdul Gafoor. "True Spa can say, please go to Subtle Senses for treatments, but now that it's no longer there to provide these treatments, what do these customers do?"

While they can still file claims with the Small Claims Tribunal, it is unclear if any orders issued by the tribunal's registrar have been fulfilled at all.

Claimants know of at least 55 orders issued, totalling $180,000. A Subordinate Courts spokesperson said, though, that 296 claims have been made against True Spa this year, as of Nov 27 - or 2 per cent of total cases filed at the Tribunal.

It is up to claimants to execute such money orders, she said. Options include obtaining a writ of seizure and sale.

A spokesperson for True Spa said it was "working out a scheme for all True Spa members affected by the closure of Subtle Senses". The scheme is expected to roll out from next week and details will be available then.

Mr Abuthahir hopes to settle the status of True Spa customers "within this week". But he and fellow liquidator Chee Yoh Chuang have another hot potato to handle. Many customers from both spas have disputed the value of their unused packages extracted from Subtle Senses' records, which affects creditors and those seeking to claim treatments from Spa Beauty and Wellness Alliance members.

The discrepancies are largely due to accounting principles that split the value of a spa package into service and product components. He said: "A lot are unhappy and feel that the amount shown on the (liquidators') website is incorrect."

[dydx]

I think it is really quite silly that so many people would agree to pay for spa service in advance by simply charging say $1,000 to their credit cards for spa packages designed to entice consumers with attractive quantity discounts or other freebies in order to get them to buy and part with their hard-earned money.

Quite clearly, some smart but bad entrepreneurs in the spa business have taken full advantage of this selling norm and the weakness and buying behavior of consumers, and cheated them big time!

[egghead]

I learnt my lesson years ago when I signed up for car polishing package and did not manage to use up the coupons before the company folded.

[Musicwhiz]

A letter to TODAY from a frustrated True Spa package purchaser.

TODAY December 22, 2010
It's Been A True Nightmare
Cassandra Poon

I RECENTLY caught an episode of Crimewatch
which dramatised a case of cheating
by a man who posed as an off-duty
Customs officer. He convinced his victims
that government officers could sell confiscated
items at very low prices, and that
the money would be donated to charity.
Believing he was a government officer,
many obliged and handed their cash
over to him. He then asked his victims
to wait while he returned to his office to
fetch their merchandise. They waited; he
never came back. Eventually, this man
was caught and sentenced to five years’
jail on 12 counts of cheating.

I bought a True Spa package, persuaded
by the True Spa sales representative
that the chief executive officer, being the
son of an ex-Chief Justice, was an honourable
businessman and would fulfil the
service contract accordingly. Convinced, I
signed up for a package and paid my share.
Then my nightmare began. Reservations
were not easy to make. Many customers
I have since spoken to could only
get their names on the waiting list, more
often than not. Many waited in vain.
Suddenly, we customers were transferred
to another operator, Subtle Senses,
without our consent. We are now stranded
like the victims in the Crimewatch
cheating case — having paid our hardearned
money and waited in vain, despite
having legal, binding contracts signed.
Even though the Order of Tribunal
has been issued for True Spa to reimburse
me, nothing has come my way, and that
deadline is long past. The sense of helplessness
on the part of us victims is further
heightened when we realise there are
almost no concrete consequences — such
as frozen accounts or suspension of operations
for True Spa — if it were to choose
to ignore these court orders altogether.
There have also been no updates
from the relevant authorities, despite
petitions having been sent and police
reports made.

Unlike the Crimewatch case, where
the police stepped in to uphold justice
for the cheated victims although they
entered into no legal contracts, we are
unable to seek justice against True Spa.
The legal documents we hold seem as
good as useless. Enforcement of the court
order has to be taken up by claimants,
at the cost of even more of our time
and money.

Why should the onus be on consumers
to curb unethical business behaviour?
I’m sure the more than 10,000 True
Spa victims would be hard-pressed to
see the difference between the cases:
Goods promised and paid for but never
delivered. We can only hope that justice
might similarly be meted out, so that our
nightmare may end.

[yeokiwi]

I think the writer of the article failed to realize the difference between the Crimewatch's case and her spa package with True Spa.

For the Crimewatch's case, the intention to cheat is clear and without doubt.
For True Spa case, unless she can prove that True Spa has an intention to cheat, True Spa is simply a case of business running into troubles due to poor business practices.

I do not know what justice she is looking for. If she is looking for a few years of jail for the business owners, no one would ever want to build a business in Singapore anymore if the jail term is meted out.

[Musicwhiz]

Hi yeokiwi,

You've made a good point, if there was to be a witchhunt mounted because every business which tried to succeed failed instead, then everyone would be scared off starting a business and Singapore would see a dearth of entrepreneurs!

That said though, perhaps CASE can really do more to protect the unwary consumer? I understand that in True Spa and Subtle Senses case, the founders had aggressively sold packages to customers even though they were aware (3 months before the news broke out) that the Company was likely insolvent and unable to honour its obligations. Not sure if this is true, but if so, this stinks of unethical behaviour. The founders should not hide behind the corporate veil and think they can get away scot-free wth such practices.

[d.o.g.]

I understand that in True Spa and Subtle Senses case, the founders had aggressively sold packages to customers even though they were aware (3 months before the news broke out) that the Company was likely insolvent and unable to honour its obligations.

This probably falls under Section 415 of the Penal Code, "Cheating" where it is made clear in Illustration (g) that the question of cheating turns on whether there was intent to deliver at the time of sale. If no, then it is cheating. If yes, then there is only a civil breach of contract i.e. lawyers but no police.

Since police reports have been made, the police are obliged to investigate. If the police conclude that there was no intent to deliver i.e. cheating was involved, the police will pursue the case. Otherwise, the customers will have to bring in the lawyers themselves.