Reliance Retail-backed Dunzo faces another insolvency case as creditor files IBC application

Invoice Discounters has filed for insolvency proceedings against Reliance Retail-backed troubled delivery startup Dunzo under the Insolvency and Bankruptcy Code (IBC).

Invoice Discounters provided services such as asset management, hiring delivery staff, conducting background checks, and supplying merchandise to Dunzo, as detailed in a platform subscription agreement and a master service agreement. 

The firm claims that Dunzo failed to pay them in full for these services, leading to the insolvency application. Previously, Betterplace, another operational creditor, initiated proceedings against Dunzo in February.

The Invoice Discounters' case was brought before the National Company Law Tribunal (NCLT), citing that Dunzo has only partially repaid its dues. The exact amount owed remains unclear. Dunzo is currently negotiating a settlement, according to a Livemint report.

The company's counsel requested two weeks, stating, "The parties are genuinely exploring settlement talks and closing to finalise the settlement details."

If these talks fail, Dunzo plans to file a formal reply. However, the creditor's counsel argued that Dunzo 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.

What does Dunzo do?

Founded in 2015 by Kabeer Biswas, Ankur Agarwal, Dalvir Suri, and Mukund Jha, Dunzo provides a wide range of delivery services to its customers such as groceries, food, medicines, pet supplies, etc.

The startup provides these services in eight Indian cities, including Bengaluru, Delhi, Gurugram, Pune, Chennai, Mumbai and Hyderabad.

For FY23, Dunzo reported a substantial loss of Rs 1,801 crore. The startup's revenue from operations also reportedly jumped to Rs 226 crore, up from Rs 54 crore in the previous fiscal year.