Singapore Car-Sharing Firm Shariot and Affiliates Owe $306 Million to DBS and OCBC for Misclassified Loans

Singapore Car Rental & Sharing Firms Seek Debt moratorium Amid $305.9 Million Owed

Singapore – December 2,2025 – A group of 18 companies linked to car rental and car-sharing services,including Autobahn Rent A Car and shariot,have filed a High Court request seeking a six-month moratorium to halt creditor actions. The move comes as the companies grapple with a collective debt of $305.9 million, triggering concerns about the stability of the automotive rental sector in Singapore.

The application, filed November 28th, aims to pause asset repossession and other debt recovery efforts while a proposed scheme of arrangement is developed. This court-supervised process allows financially distressed companies to negotiate debt restructuring with creditors and potentially continue operations.

The financial strain follows a previous request on November 25th by nine of the companies for creditors to temporarily suspend recovery actions on $180 million in debt, largely attributed to Autobahn Rent A Car. Since then, creditors have reportedly increased pressure to recover outstanding amounts.

Major Creditors Exposed

The list of creditors reveals notable exposure from major financial institutions:

* DBS Bank: $94.8 million
* UOB: $13.4 million
* OCBC Bank: $8.6 million
* Teck Wei Credit: $70 million
* Toyota Financial Services: $25 million
* motorway: $22.8 million

Other notable creditors include Borneo Motors Singapore ($14.6 million), Komoco Motors ($2 million), and Eazy Insurance ($1.8 million). The debt primarily stems from vehicle hire-purchase agreements, alongside business loans, mortgages, and service fees. Unpaid CPF contributions ($186,202) and taxes owed to IRAS ($125,67

What are the potential consequences for banks, like DBS and OCBC, of misclassifying loans as lower risk than they actually are?

Shariot’s $306 Million Debt: A Deep Dive into Misclassified Loans in Singapore

The Scale of the financial Trouble

Singaporean car-sharing firm Shariot and its affiliated companies are facing a notable financial crisis, owing a staggering $306 million to DBS and OCBC banks. This substantial debt stems from loans that were allegedly misclassified,leading to a complex legal and financial situation. The case highlights potential risks within the car-sharing industry and the importance of accurate loan classification in financial institutions. The situation is currently unfolding in the Singapore High Court, with ongoing legal proceedings to determine the extent of the banks’ claims and Shariot’s liabilities.

Understanding the Misclassification Allegations

The core of the dispute revolves around the classification of loans extended to Shariot and its related entities. DBS and OCBC argue that these loans were improperly categorized, perhaps masking the true risk associated with lending to the car-sharing company.

Here’s a breakdown of the key allegations:

* Operating Leases vs.Finance leases: A central point of contention is whether certain agreements were correctly classified as operating leases or should have been treated as finance leases. Finance leases typically carry higher risk assessments and stricter accounting standards.

* Impact on Capital Adequacy: Misclassifying loans can artificially inflate a bank’s capital adequacy ratio, presenting a misleading picture of its financial health to regulators and investors.

* Breach of Contract: The banks allege that Shariot misrepresented the nature of the transactions, leading to a breach of contract and justifying their claim for the full $306 million.

* Related Party transactions: Scrutiny is also being applied to transactions involving related parties, raising questions about potential conflicts of interest and the fairness of the lending terms.

Key Players involved

Several entities are central to this unfolding financial drama:

* Shariot: The Singapore-based car-sharing company at the heart of the dispute. Founded in 2016, Shariot aimed to disrupt the transportation sector with its on-demand vehicle rental service.

* DBS Bank: One of Singapore’s largest banks and a major creditor to Shariot, seeking to recover a significant portion of the $306 million.

* OCBC Bank: Another leading Singaporean bank involved in the lending arrangements and pursuing legal action against Shariot.

* Strides Automotive: An affiliate company of Shariot, also implicated in the loan misclassification allegations.

* Horatio Holdings: Another affiliated entity, further complicating the financial web.

Timeline of Events

A concise timeline of key events leading to the current situation:

1. 2016: Shariot launches its car-sharing service in Singapore.
2. 2017-2019: Shariot secures loans and enters into leasing agreements with DBS and OCBC.
3. 2020-2022: Banks begin to raise concerns about the classification of certain loans and leases.
4. 2023: DBS and OCBC initiate legal proceedings against Shariot and its affiliates, claiming $306 million in unpaid debts.
5. 2024-2025: Ongoing court hearings and investigations into the loan misclassification allegations.

Implications for the Car-Sharing Industry

The Shariot case sends ripples through the Singapore car-sharing market and beyond. It raises critical questions about the financial sustainability of these business models and the due diligence required by lenders.

* Increased Scrutiny: Expect heightened scrutiny of lending practices within the car-sharing sector. Banks will likely demand more rigorous financial reporting and risk assessments.

* impact on Funding: the case could make it more difficult for car-sharing companies to secure funding in the future, particularly from traditional financial institutions. Venture capital and alternative financing options may become more prevalent.

* Regulatory Review: The Monetary Authority of Singapore (MAS) may review regulations governing loan classification and risk management in the financial sector.

* Consumer Confidence: The situation could erode consumer confidence in car-sharing services, potentially impacting demand.

Loan Classification: A Primer

Understanding loan classification is crucial to grasping the complexities of this case.Banks categorize loans based on their risk profile, which influences the amount of capital they must set aside to cover potential losses.

Here’s a simplified overview:

1. Standard Loans: Considered low-risk, requiring minimal capital reserves.
2. Substandard loans: Loans with some credit weaknesses, requiring increased capital allocation.
3. Doubtful Loans: Loans with a high probability of default, necessitating substantial capital reserves.
4. Loss Loans: Loans deemed uncollectible, requiring a full write-off.

Misclassifying a loan as lower risk than it actually is can have severe consequences for a bank’s financial stability.

Potential Outcomes of the Legal Battle

The outcome of the