SUMMARY
- The NCLT criticized Dunzo for failing to settle debts despite a three-month grace period, indicating settlement talks had collapsed.
- Dunzo owes significant amounts to creditors and advertising partners, while ongoing financial struggles led to layoffs, leaving just 50 employees.
- Dunzo’s efforts to close a $22-25 million funding round have been delayed as investors remain cautious about the company’s future growth.
The National Company Law Tribunal (NCLT) has reprimanded Dunzo Digital Pvt Ltd for its failure to settle debts with its creditors despite being given ample time. The Bengaluru bench of the NCLT, led by Justices K Biswal and Manoj Kumar Dubey, expressed frustration with Dunzo’s inaction during a hearing on Friday, stating, “You have taken more than three months for settlement and still nothing has happened.”
The tribunal was reviewing insolvency petitions filed by two creditors, Invoice Discounters of Dunzo Digital and Velvin Packaging, after Dunzo failed to repay them. Notices were issued to the quick commerce company in February and March, and it was given time to respond. However, Dunzo has yet to file a reply, even after seeking extensions, leading the NCLT in June to rule that the company had forfeited its right to respond.
Counsel for Velvin Packaging, Manjunath Hiral, indicated that hopes for settlement were dashed as Dunzo’s application suggested the failure of negotiations. In July, Invoice Discounters of Dunzo Digital revealed it had received only half the amount owed, though the total sum was undisclosed.
Dunzo, which owes ₹4 crore to Betterplace Safety Solutions and ₹11.4 crore to advertising partners such as Google India, Facebook India, and Glance, has been grappling with severe financial issues. A recent report highlighted that the company had laid off 150 employees in August, leaving only 50 staff in its core teams.
Dunzo’s efforts to secure a funding round of $22-25 million from investors have also hit roadblocks, with many potential investors wary of the company’s uncertain growth trajectory.
The NCLT has scheduled the next hearing for November 4, giving Dunzo a final opportunity to file an interlocutory application explaining why its objections should be considered.
