NCLT Issues Notice To GoMechanic On Insolvency Plea Over Non Payment Of Dues

The National Company Law Tribunal (NCLT) on Wednesday (February 15) issued a notice to the beleaguered Sequoia-backed automobile after-sales service startup GoMechanic over an insolvency plea filed against the company.

DigiRovers, a Gurugram-based company that provided digital marketing services to the startup, filed a petition before the tribunal last month, alleging the startup defaulted on payments worth INR 1.25-1.5 Cr.

According to a report by The Morning Context, GoMechanic made timely payments to DigiRovers until July 2022, after which it defaulted for a couple of months. The startup put it down to an external audit and due diligence at that time, according to a source cited by the online news portal.

DigiRovers issued a notice to GoMechanic in January, and after having received no clear response, it moved the NCLT. The hearing in the case is scheduled to be held on March 27.

Denying the claims, a GoMechanic spokesperson said that the NCLT has not admitted any insolvency case against the startup. The spokesperson added that all the operational creditors were fully supportive.

Inc42 has reached out to GoMechanic for comments, and the article will be updated accordingly.

The insolvency plea against GoMechanic comes at a time when it is considering a fire sale and has reportedly reached out to car marketplaces such as Cars24 and Spinny, after having fired 70% of its workforce last month amid mounting problems.

In a LinkedIn post last month, GoMechanic cofounder Amit Bhasin publicly admitted to committing “errors in judgment” in financial reporting while trying to pursue growth, which ultimately led to the startup’s capitulation in recent weeks.

“Our passion to survive the intrinsic challenges of this sector, and manage capital, took the better of us and we made errors in judgment as we followed growth at all costs, including in regard to financial reporting, which we deeply regret,” Bhasin’s LinkedIn post read.

Founded in 2016 by Bhasin, Kushal Karwa, Rishabh Karwa, and Nitin Rana, GoMechanic is a digital car maintenance and servicing app that connects car owners with repair service providers in their area.

After the news of alleged fraud at GoMechanic broke, investors, including Sequoia India, Orios, Tiger Global, and Chiratae Ventures, launched a full-blown forensic audit of the company. Orios has written down its investment in the startup since then.

In a joint statement, GoMechanic investors said the startup’s founders recently informed them of the “serious inaccuracies in the company’s financial reporting.”