SoftBank-backed Style Theory faces lawsuit from laundry vendor

Style Theory, a Singapore-based fashion rental startup backed by SoftBank Ventures Asia, is facing legal action for “continued negligence in completing its obligations” from its Indonesian vendor Beyond or PT Adhikara Bangun Abadi. The maximum estimated value of the contract between both parties is 118.97 billion rupiah (around US$8.3 million), Beyond says in a statement.

“With a heavy heart,” the vendor says it “has decided to proceed with filing a lawsuit” against Style Theory to ensure that it can fulfill its own obligations to its employees, partners, and shareholders.

Style Theory tells Tech in Asia that it is not in breach of its contract with Beyond. “Regretfully, this intended legal action does not take into account Covid-19 as a Force Majeure as stipulated in the Laundry Service Agreement and the impact the ongoing pandemic has had on many business sectors in Indonesia, including Style Theory,” CEO Chris Halim says.

He adds that the “maximum estimated value” of the contract is inflated and not based on the actual value.

Style Theory’s Box / Photo credit: Style Theory

Beyond’s representative says that both companies signed the Laundry Service Agreement on July 9, 2020. The vendor had set up a laundry and dry cleaning service for Style Theory, who committed to take up a certain amount of its capacity.

The partnership was smooth at the start. But since early 2021, Style Theory has “failed to complete the payments due to all outstanding invoices,” the vendor alleges.

“They say that they need to preserve cash due to the pandemic,” a Beyond representative tells Tech in Asia.

He explained that Beyond had tried to work out an amicable solution with Style Theory, including letting the startup pay by installment. However, after agreeing to a payment schedule, Style Theory still did not fulfill its obligations. The vendor also tried to adjust the terms and conditions of the service agreement and give a discount, but Style Theory did not respond.

However, Halim said that his company has been conducting discussions with Beyond in good faith, as they figure out a solution that is fair and equitable to both parties. He added that he is not aware that those negotiations had reached an impasse.

He also declared that Style Theory has paid Beyond for all laundry and dry cleaning services delivered since the contract began. Nevertheless, the startup remains committed to working with Beyond to reach a fair agreement, Halim said.

Style Theory was founded by Halim and Raena Lim in 2016 and expanded to Indonesia a year later. Since its inception, the company has raised US$25 million, including a US$15 million series B funding round led by SoftBank Ventures Asia in December 2019. It also counts Alpha JWC Ventures and The Paradise Group among its investors.

According to data from VentureCap Insights, Style Theory made US$5.5 million and lost US$5.9 million in 2019. At that time, it had more than 200,000 registered users.