Dunzo In Insolvency Soup Again As Another Creditor Files IBC Application

Legal troubles mounted for cash-strapped hyperlocal delivery startup Dunzo this week as another of its creditors moved the Bengaluru Bench of the National Company Law Tribunal seeking initiation of insolvency proceedings against the company.

In January, Dunzo’s creditor Invoice Discounters of Dunzo Digital filed an application under section 7 of Insolvency and Bankruptcy Code, 2016, alleging that the Reliance Retail-backed startup has cleared only 50% of the part payment, Mint reported.

However, it is yet to be ascertained how much money was owed to Dunzo’s creditor.

During the hearing on July 22, the lawyer representing Dunzo argued before the NCLT that settlement talks between both the parties were underway and sought two weeks to reach an agreement with its creditor.

However, the bench of justices K Biswal (judicial) and Manoj Kumar Dubey (technical) declined to grant further time for settlement and scheduled the final hearing on the matter for August 6.

According to an NCLT order dated May 25, both the creditor and debtor had sought more time to reach a settlement on the ground that were talks were going on. At the time, the bench had directed Dunzo to reply to the insolvency plea within two weeks in the event of no settlement.

However, on June 19, Invoice Discounters informed the tribunal that the settlement talks fell through. The NCLT order then said that Dunzo has forfeited its right to file a reply.

The development comes days after Betterplace Safety Solutions moved the NCLT in Bengaluru against Dunzo for unpaid dues worth INR 4 Cr.

Earlier this year, Dunzo was dealt a body blow with its key investor Lightbox exiting the company’s board. The company has been facing a cash crunch. Vendors such as Google India, Nilenso, Clover Ventures, Facebook India, Cupshup, Koo, and Glance are collectively owed amounts totalling approximately INR 11.4 Cr.

The financial strain on the Bengaluru-based quick commerce startup is evident from its FY23 numbers. Dunzo incurred a staggering loss of INR 1,801 Cr in FY23, a sharp increase from INR 464 Cr in the preceding fiscal year.

 Update | August 1, 6:02 PM: The story has been edited following clarification from Invoice Discounters of Dunzo Digital.

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