EV cab start-up BluSmart has entered insolvency in India
What's the story
Indian electric cab start-up BluSmart has entered insolvency, according to an order from the company law tribunal in the country. The move comes amid corporate governance concerns after a regulatory probe found its co-founder had diverted funds intended for vehicle purchases. The National Company Law Tribunal (NCLT) admitted the insolvency proceedings against BluSmart, following a petition filed by financial creditor Catalyst Trusteeship on May 13.
Accusations
Regulatory ban on co-founder
BluSmart suspended its operations in April, after India's market regulator barred co-founder Anmol Jaggi from the securities market. The ban came following allegations that Jaggi diverted funds from his publicly listed company, Gensol, for personal use. This included spending on a luxury apartment worth $5 million and golf set worth $30,379.
Proceedings
Tribunal finds case of default
The creditor alleged that BluSmart defaulted on multiple payments totaling around $147,500, and received no repayment from the company. In response, BluSmart had argued that the petition was premature. However, the tribunal found that the company's principal debt exceeded ₹1 crore, enough to initiate corporate insolvency resolution process.
Appointment
Interim resolution professional appointed
The tribunal appointed NPV Insolvency Professionals as interim resolution professional to oversee proceedings. It also stated the insolvency would take effect from the date of the order, marking the official start of creditor claims, asset evaluation, and possible restructuring/liquidation under insolvency and bankruptcy code.