A dedicated bankruptcy tribunal on Friday pulled up Dunzo Digital Pvt Ltd, a quick commerce platform backed by Reliance Retail, for not reaching a settlement with its creditors despite being given “enough time” to resolve the matter.
“You have taken more than three months for settlement and still nothing has happened. We are not allowing you to file any objections. First file your interlocutory application on why your objections should be considered,” the Bengaluru bench of the National Company Law Tribunal (NCLT) said on Friday. It scheduled the next hearing for 4 November.
The bench, led by Justices K Biswal and Manoj Kumar Dubey, was hearing insolvency petitions filed by two of Dunzo's creditors – Invoice Discounters of Dunzo Digital and Velvin Packaging – after the company failed to repay them. The NCLT had issued notices to the company over these petitions in February and March, and asked Dunzo to file a reply.
On Friday the bench noted that Dunzo had not filed its reply to the petitions even after seeking time to do so, following which the NCLT said in June that the company had forfeited its right to reply to the petitions.
Manjunath Hiral, counsel for Velvin Packaging, told the tribunal, “We were under the impression that they will come forward and close the settlement... The application that they have filed is a shock to us and an indicator that the settlement talks have failed."
In July, Invoice Discounters of Dunzo Digital told the NCLT it had received only half the money it was owed. The actual amount owed was not disclosed before the tribunal.
Dunzo reportedly owes ₹4 crore to another creditor, Betterplace Safety Solutions, and ₹11.4 crore to advertising partners and vendors including Google India, Facebook India and Glance.
On 31 August Mint reported Dunzo had sacked 150 employees in a fresh round of layoffs, leaving it with just 50 employees in its core supply and marketplace teams. The company was looking to claw back profits to pay off liabilities including salaries of current and former employees as well as vendor payments as it looked for capital to survive, according to two people aware of the development.
In May, Mint reported that Dunzo was in the final stages of closing a funding round of $22-25 million from new and existing investors. However, the transaction was taking much longer than expected to close as many potential investors remained wary of the company’s growth path, one of the people cited above said.
