Dunzo, a delivery startup backed by Reliance Retail, is facing a new insolvency case filed by Invoice Discounters under the Insolvency and Bankruptcy Code (IBC). This adds to Dunzo’s existing financial troubles, as it continues to struggle with unpaid debts.
Invoice Discounters, which provided various services to Dunzo, including asset management, hiring delivery staff, conducting background checks, and supplying merchandise, has initiated insolvency proceedings. They claim that Dunzo has failed to fully pay for these services as outlined in their agreements. This case follows a similar proceeding initiated by another creditor, Betterplace, in February.
Proceedings at NCLT
The case has been brought before the National Company Law Tribunal (NCLT). Invoice Discounters allege that Dunzo has only partially repaid its dues, though the exact amount owed remains unclear. Dunzo is currently negotiating a settlement with Invoice Discounters. According to a report by Livemint, Dunzo’s counsel has requested two weeks for the parties to finalize settlement details.
Statements and Arguments
Dunzo’s counsel stated, “The parties are genuinely exploring settlement talks and closing to finalize the settlement details.” However, the creditor’s counsel argued that Dunzo has only paid half of the amount due. The NCLT bench, led by justices K Biswal and Manoj Kumar Dubey, has given both parties two days to file a joint affidavit regarding any settlement proposal. If a settlement is not reached, the matter will be heard again on August 6.
About Dunzo
Founded in 2015 by Kabeer Biswas, Ankur Agarwal, Dalvir Suri, and Mukund Jha, Dunzo offers a wide range of delivery services, including groceries, food, medicines, and pet supplies. The startup operates in eight Indian cities: Bengaluru, Delhi, Gurugram, Pune, Chennai, Mumbai, and Hyderabad.
Financial Performance
For the fiscal year 2023 (FY23), Dunzo reported a significant loss of Rs 1,801 crore. However, the startup’s revenue from operations increased to Rs 226 crore, up from Rs 54 crore in the previous fiscal year. Despite the increase in revenue, Dunzo’s financial challenges continue to mount, leading to the current insolvency proceedings.
Dunzo’s ongoing financial difficulties and the new insolvency case filed by Invoice Discounters highlight the challenges the startup faces. As it navigates settlement talks and potential legal proceedings, the outcome will be critical for its future operations and financial stability.
