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Dunzo has only made 50% of part payment, creditor tells NCLT
- Invoice Discounters of Dunzo Digital has filed an application under the Insolvency and Bankruptcy Code, seeking the initiation of insolvency proceedings against the firm.
- Betterplace, another of Dunzo's creditors, had filed a insolvency application against the company in February.
Invoice Discounters of Dunzo Digital, a creditor of e-commerce delivery firm Dunzo, has filed an application under the Insolvency and Bankruptcy Code, seeking the initiation of insolvency proceedings against the firm. It told the National Company Law Tribunal (NCLT) that the company has only made 50% of the part payment. There is no clarity on the exact amount Dunzo owes its creditors. The startup counts Reliance Retail and Google among its investors.
Dunzo's counsel told the tribunal, “The parties are genuinely exploring settlement talks and closing to finalise the settlement details. Kindly grant us two weeks time. If the settlement talks fail, we will go ahead and file a reply in the matter.” The creditor's counsel contesting these claims and said the company has paid only half of the money it owes.
A bench led by justices K Biswal and Manoj Kumar Dubey said that any settlement should be initiated by the petitioner. “We are not bothered… [for] any settlement proposal henceforth, both the parties need to file a joint affidavit within two days, otherwise we will reject [it]. This is the position.” It said it would hear the matter next on 6 August.
Dunzo forfeited its right to reply
According to an NCLT order dated 29 May, both parties had sought more time as settlement talks were underway. The bench had said that in case there was no settlement, Dunzo would have to reply to the insolvency petition in two weeks.
However, on 19 June, Invoice Discounters told the tribunal that the settlement talks had failed. The tribunal then said Dunzo has forfeited its right to file a reply.
Betterplace, one of Dunzo's operational creditors, also filed a insolvency application against the company in February. It, too, did not disclose the exact amount on which the company defaulted.
Dunzo's liquidity crisis
Dunzo is in the midst of a liquidity crisis that has over the past year forced it to change business models, delay salaries and vendor payments, and reduce its workforce.
On 3 May we reported the startup is in the final stages of closing a “transaction" with investors that it had been looking to raise for at least a year to clear pending liabilities, including salaries.
The arrangement is also expected to “find safety for the company into perpetuity", co-founder and chief executive Kabeer Biswas told employees on Friday in an internal communication, which Mint saw.
The report said, citing a person aware of the developments, that Dunzo was in late-stage talks to raise $22 million-$25 million in a mix of equity and debt from a clutch of new and existing investors.
Dunzo did not confirm this, but Biswas said in a message to employees that the company would conduct reviews on 3 and 4 May to finalise the transaction, and that it had also negotiated its liabilities to settle for considerably lower amounts.
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First Published:25 Jul 2024, 03:22 PM IST
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