Zilingo Creditors Recall Loans Amid Controversies & Absence Of CEO

SUMMARY

The recalling of loans by debt holders has reportedly led the company to appoint a financial adviser to assess its financing options

The move comes shortly after Inc42’s extensive reporting on how faulty accounting practices and poor financials skipped investors’ due diligence, and the disparities between the founders, the company and the board

The B2B fashion marketplace startup was once considered among Southeast Asia’s most successful startups but is now marred by controversies concerning the company’s operations and governance

For the past couple of months, Singapore-based Zilingo has been plagued with controversies akin to the BharatPe mess. Now, in a dramatic turn of events, the company’s debtholders have decided to recall their entire loan. This has reportedly led the company to appoint a financial adviser to assess options.

“Due to Zilingo’s failure to fulfil prior obligations under the loan agreement, the company’s lenders have made the decision to accelerate the repayment of the entire loan,” Zilingo’s board said in a statement to Reuters.

Last month, the startup’s board suspended its CEO and cofounder Ankiti Bose amid an internal investigation into its accounting practices and financials. Zilingo has been functioning without a CEO since then. Cofounder Dhruv Kapoor is looking after his primary role as the CTO and Bose’s role as CEO in her absence.

As per some reports, ex-Myntra chief Ramesh Bafna, who was appointed as the CFO of Zilingo in March 2022, is likely to be the next CEO of the company.

Founded in 2015, Zilingo works with thousands of apparel factories and merchants in South Asia and Southeast Asia, connecting them to retailers worldwide. It was valued at nearly $1 Bn in its last funding round in 2019.

From Dizzying Highs To Stunning Lows: The Fall Of Zilingo

The Singapore-based B2B fashion marketplace was once considered among the most successful startups in Southeast Asia. However, questions about its accounting practices and the subsequent suspension of Bose hit the startup hard.

The Sequoia Capital-backed startup was in the process of raising a fresh round of investment which led to further questions about its accounting standards and financial practices.

When Inc42 dug deeper into the issue to understand how faulty accounting practices and poor financials skipped the eyes of Zilingo’s board, we found that the relationship between Bose and cofounder Kapoor had severed over the years over the differences in their vision for the company and the cultural disparity between operations and technology.

Bose further alleged that she faced harassment in 2021, and the startup’s board appointed Deloitte to further investigate this. She also sent legal notices to Kapoor and chief operating officer Aadi Vaidya on the complaints raised by her last year. Before that, Sequoia Capital’s Shailendra Singh also stepped down from the startup’s board along with Temasek Holdings Pte’s Xu Wei Yang and Burda Principal Investment Ltd’s Albert Shyy.

Zilingo is the fourth high-profile company in Sequoia’s portfolio in which an internal or external investigation has raised questions about accounting practices and other corporate governance standards.

Correction Note | May 18, 2022, 04:30 PM

In the previous version of the article, Ramesh Bafna’s designation was wrongly mentioned. It has been updated to reflect the current designation.