Reliance Retail-backed hyperlocal delivery startup Dunzo has come under scrutiny from the National Company Law Tribunal (NCLT) for failing to reach a settlement with its creditors.
The͏͏ Bengaluru͏͏ bench͏͏ of͏͏ the͏͏ NCLT͏͏ noted͏͏ today͏͏ (September͏͏ 27)͏͏ that͏͏ despite͏͏ being͏͏ granted͏͏ three͏͏ months͏͏ to͏͏ resolve͏͏ its͏͏ dispute͏͏ with͏͏ creditors,͏͏ Dunzo͏͏ has͏͏ yet͏͏ to͏͏ reach͏͏ a͏͏ settlement,͏͏ according͏͏ to͏͏ Mint.
The͏͏ tribunal͏͏ asserted͏͏ that͏͏ Dunzo͏͏ had͏͏ “enough͏͏ time”͏͏ to͏͏ settle͏͏ with͏͏ its͏͏ creditors͏͏ and͏͏ declined͏͏ to͏͏ hear͏͏ the͏͏ company’s͏͏ objections͏͏ to͏͏ the͏͏ insolvency͏͏ cases͏͏ filed͏͏ against͏͏ it.͏͏ The͏͏ NCLT͏͏ has͏͏ reportedly͏͏ instructed͏͏ Dunzo͏͏ to͏͏ submit͏͏ an͏͏ interlocutory͏͏ application͏͏ if͏͏ it͏͏ wishes͏͏ for͏͏ its͏͏ objections͏͏ to͏͏ be͏͏ considered.
Two͏͏ of͏͏ Dunzo’s͏͏ creditors,͏͏ Invoice͏͏ Discounters͏͏ of͏͏ Dunzo͏͏ Digital͏͏ and͏͏ Velvin͏͏ Packaging,͏͏ had͏͏ earlier͏͏ approached͏͏ the͏͏ NCLT͏͏ to͏͏ initiate͏͏ insolvency͏͏ proceedings͏͏ against͏͏ the͏͏ company͏͏ due͏͏ to͏͏ outstanding͏͏ payments.
In͏͏ January,͏͏ Invoice͏͏ Discounters͏͏ of͏͏ Dunzo͏͏ Digital͏͏ submitted͏͏ an͏͏ application͏͏ to͏͏ the͏͏ NCLT,͏͏ claiming͏͏ that͏͏ the͏͏ startup͏͏ had͏͏ paid͏͏ only͏͏ 50%͏͏ of͏͏ the͏͏ outstanding͏͏ amount.͏͏ The͏͏ exact͏͏ debt͏͏ Dunzo͏͏ owes͏͏ its͏͏ creditors͏͏ remains͏͏ unclear.
This͏͏ development͏͏ comes͏͏ as͏͏ Dunzo͏͏ grapples͏͏ with͏͏ significant͏͏ challenges,͏͏ including͏͏ a͏͏ severe͏͏ cash͏͏ crunch,͏͏ layoffs,͏͏ and͏͏ the͏͏ threat͏͏ of͏͏ bankruptcy.͏͏ Last͏͏ month,͏͏ reports͏͏ indicated͏͏ that͏͏ the͏͏ Bengaluru-based͏͏ startup͏͏ had͏͏ laid͏͏ off͏͏ 150͏͏ employees͏͏ across͏͏ its͏͏ supply͏͏ and͏͏ market͏͏ verticals͏͏ as͏͏ part͏͏ of͏͏ its͏͏ cost-cutting͏͏ measures.
Continue͏͏ Exploring:͏͏ Cash-strapped͏͏ Dunzo hit͏͏ with͏͏ fresh͏͏ legal͏͏ trouble͏͏ as͏͏ another͏͏ creditor͏͏ seeks͏͏ insolvency
Dunzo’s͏͏ Losses͏͏ Soar͏͏ to͏͏ INR͏͏ 1,801͏͏ Cr:
Dunzo’s͏͏ losses͏͏ surged͏͏ over͏͏ threefold͏͏ to͏͏ INR͏͏ 1,801͏͏ Cr͏͏ in͏͏ FY23,͏͏ up͏͏ from͏͏ INR͏͏ 464͏͏ Cr͏͏ in͏͏ the͏͏ previous͏͏ fiscal.͏͏ The͏͏ financial͏͏ strain͏͏ led͏͏ to͏͏ delays͏͏ in͏͏ salary͏͏ disbursements͏͏ for͏͏ current͏͏ and͏͏ former͏͏ employees,͏͏ along͏͏ with͏͏ unpaid͏͏ dues͏͏ to͏͏ vendors.
Founded͏͏ in͏͏ 2015͏͏ by͏͏ Kabeer͏͏ Biswas,͏͏ Suri,͏͏ Mukund͏͏ Jha,͏͏ and͏͏ Ankur͏͏ Aggarwal,͏͏ Dunzo͏͏ links͏͏ consumers͏͏ to͏͏ local͏͏ stores,͏͏ offering͏͏ delivery͏͏ services͏͏ for͏͏ groceries,͏͏ medicines,͏͏ food,͏͏ and͏͏ other͏͏ daily͏͏ essentials.͏͏ Its͏͏ entry͏͏ into͏͏ the͏͏ quick͏͏ commerce͏͏ sector͏͏ with͏͏ Dunzo͏͏ Daily͏͏ significantly͏͏ accelerated͏͏ its͏͏ cash͏͏ burn.
Earlier͏͏ this͏͏ year,͏͏ the͏͏ NCLT͏͏ cautioned͏͏ Dunzo͏͏ that͏͏ it͏͏ would͏͏ enforce͏͏ a͏͏ moratorium͏͏ on͏͏ the͏͏ hyperlocal͏͏ delivery͏͏ platform͏͏ if͏͏ it͏͏ did͏͏ not͏͏ swiftly͏͏ respond͏͏ to͏͏ a͏͏ notice͏͏ regarding͏͏ unpaid͏͏ dues͏͏ of͏͏ INR͏͏ 4͏͏ Cr͏͏ owed͏͏ to͏͏ Betterplace͏͏ Safety͏͏ Solutions.
Dunzo,͏͏ grappling͏͏ with͏͏ a͏͏ major͏͏ cash͏͏ shortage,͏͏ has͏͏ been͏͏ served͏͏ with͏͏ numerous͏͏ legal͏͏ notices͏͏ from͏͏ vendors͏͏ demanding͏͏ payment͏͏ for͏͏ unpaid͏͏ dues,͏͏ further͏͏ complicating͏͏ its͏͏ efforts͏͏ to͏͏ sustain͏͏ operations.
Last͏͏ year,͏͏ Dunzo͏͏ was͏͏ issued͏͏ legal͏͏ notices͏͏ from͏͏ Google͏͏ India,͏͏ Nilenso,͏͏ Clover͏͏ Ventures,͏͏ Facebook͏͏ India͏͏ Online͏͏ Services͏͏ Private͏͏ Limited͏͏ (FBI),͏͏ Cupshup,͏͏ Koo,͏͏ and͏͏ Glance͏͏ over͏͏ unpaid͏͏ dues,͏͏ which͏͏ total͏͏ approximately͏͏ INR͏͏ 11.4͏͏ Cr.
Cofounder͏͏ Pursues͏͏ New͏͏ Funding͏͏ Opportunities:
As͏͏ Dunzo͏͏ faces͏͏ insolvency͏͏ proceedings,͏͏ cofounder͏͏ and͏͏ former͏͏ chief͏͏ technology͏͏ officer͏͏ Mukund͏͏ Jha͏͏ is͏͏ reportedly͏͏ in͏͏ discussions͏͏ with͏͏ Together͏͏ Fund͏͏ to͏͏ secure͏͏ INR͏͏ 50͏͏ Cr͏͏ to͏͏ INR͏͏ 80͏͏ Cr͏͏ in͏͏ funding͏͏ for͏͏ his͏͏ new͏͏ venture,͏͏ GenAI.
