Dunzo, backed by Reliance and Google, faces another insolvency case
What's the story
E-commerce delivery firm Dunzo, backed by heavy weights such as Reliance and Google, is once again grappling with insolvency proceedings.
The latest case has been filed by Invoice Discounters, a creditor of the company, under the Insolvency and Bankruptcy Code (IBC).
The creditor alleges that Dunzo has not fully compensated for services including asset management, hiring delivery staff, background checks, and merchandise.
The exact amount owed by Dunzo remains undisclosed.
Past cases
Dunzo's history of insolvency cases
This is not the first time Dunzo has faced insolvency proceedings. Earlier in February, Betterplace, another creditor of the company, filed a case against Dunzo.
In May 2024, the National Company Law Tribunal (NCLT) granted Dunzo a two-week extension to settle its pending dues with Betterplace Safety Solutions.
Prior to this incident, Velvin Group had also initiated an insolvency case against Dunzo which was accepted by the Bengaluru bench of the NCLT.
Settlement talks
Current insolvency case and settlement negotiations
The current case with Invoice Discounters was brought before the NCLT, alleging that Dunzo has only partially repaid its dues.
Dunzo's counsel requested a two-week period for settlement negotiations, stating, "The parties are genuinely exploring settlement talks and closing to finalize the settlement details."
The NCLT bench has given both parties two days to file a joint affidavit regarding any settlement proposal.
If the parties are unsuccessful in reaching an agreement, the matter will be heard again on August 6.
Internal issues
Dunzo's internal challenges and investor changes
Dunzo is not only facing legal challenges but also internal ones. A key investor in the company, LightBox, has relinquished its board seat.
Additionally, Dunzo co-founders Dalvir Suri and Mukund Jha have reportedly left the company and given up their board seats.
The company is currently dealing with a liquidity crisis, which has forced it to change business models, delay salaries and vendor payments, and reduce its workforce.
Fundraising talks
Dunzo's fundraising efforts amid crisis
Despite the ongoing crisis, Dunzo is reportedly in late-stage talks to raise between $22 million and $25 million in a mix of equity and debt from a group of new and existing investors.
According to co-founder and chief executive Kabeer Biswas, this arrangement is expected to "find safety for the company into perpetuity."
Dunzo currently operates in eight Indian cities: Bengaluru, Delhi, Gurugram, Pune, Chennai, Jaipur, Mumbai and Hyderabad.