The National Company Law Tribunal (NCLT) has warned Dunzo that it may impose a moratorium on the hyperlocal delivery startup if it does not promptly address a notice regarding unpaid dues worth INR 4 Cr.
Earlier, Betterplace Safety Solutions lodged a complaint with the NCLT in Bengaluru against Dunzo regarding unsettled payments.
The panel, consisting of judicial member Justice T Krishnavalli and technical member Manoj Kumar Dubey, issued a notice concerning the issue and set a hearing for March 4.
During the hearing, the petitioner emphasized that Dunzo owed INR 4 Cr, had incurred substantial losses, and despite receiving notices, the startup remained unresponsive, as reported by NDTV.
The owed amount, supported by emails, was supplemented by news reports detailing Dunzo’s significant financial losses.
Betterplace drew parallels between the situation and the BYJU’S case, while Dunzo acknowledged its debt and requested an extension. The company expressed concerns about the potential depletion of Dunzo’s assets due to its financial predicament.
The legal counsel representing Betterplace advocated for maintaining the status quo regarding Dunzo’s assets to prevent any interference or alterations that could affect third-party interests.
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The tribunal queried the rationale behind any resistance to preserving the status quo to protect third-party interests in the company’s assets and maintain the current situation.
Consequently, the bench granted Dunzo a week to reply to the notice, specifying that no third-party interests could be established during this period, and the status quo on assets would remain unchanged.
The next hearing is scheduled for April 1.
Dunzo’s outstanding debt to Betterplace stems from a variety of services provided, including background verification, recruitment of delivery personnel, asset management, and merchandise. These services are outlined in both a master service agreement and a platform subscription agreement.
Founded in 2015 by Kabeer Biswas, Suri, Mukund Jha, and Ankur Aggarwal, Dunzo connects consumers with nearby stores and facilitates deliveries of products including groceries, medicines, and food, among other daily needs. Its expansion into the quick commerce space with Dunzo Daily led to a sharp increase in its cash burn.
Recently, the NCLT accepted Velvin Packaging Solutions Private Limited’s insolvency petition against the quick commerce startup. Velvin Group, a prominent Indian producer of eco-friendly packaging solutions, lodged the petition in November of the previous year. The registration of the plea took place in February.
Continue Exploring: Dunzo faces further setback as NCLT accepts insolvency plea filed by Velvin Packaging
Over the last one year, Dunzo has been confronted with several legal notices from its vendors, pressing for payment of outstanding dues. These notices have compounded Dunzo’s difficulties in sustaining its operations amidst a severe cash crunch.
Last year, Dunzo received legal notices from Google India, Nilenso, Clover Ventures, Facebook India Online Services Private Limited (FBI), Cupshup, Koo, and Glance for the same reason. The outstanding dues to these vendors amount to around INR 11.4 Cr.
The quick commerce startup based in Bengaluru witnessed a significant increase in losses, soaring to INR 1,801 Cr in the financial year 2022-23 (FY23), up from INR 464 Cr in the preceding fiscal year. Despite a notable rise in operating revenue to INR 226.6 Cr in FY23 from INR 54.3 Cr in FY22, total expenses surged by 286% to INR 2,054.4 Cr in FY23.
Continue Exploring: Legal troubles mount for struggling Dunzo as companies seek payment resolution