Chennai-based homestay startup Stayzilla may have to face insolvency. A division bench of the National Company Law Tribunal (NCLT) has ordered the now-defunct company owned by Inasra Technologies Pvt. Ltd to initiate the corporate insolvency resolution process.
The petition was filed by one of Stayzilla’s creditors Jigsaw Advertising. The Hindu reported that NCLT has appointed an interim resolution professional to take charge of the management of Stayzilla.
In February, Stayzilla co-founder and CEO Yogendra Vasupal had said that the company will temporarily stop operating and will “reboot with a different business model”.
Founded in 2005 by Vasupal and Sachit Sanghi, the startup operated in both the ultra-low-budget and luxury segments to offer homestays, besides accommodations in lodges and guesthouses.
In May 2016, it had claimed to have over 55,000 accommodations across more than 4,000 cities and towns in India. Unlike popular online travel agencies, such as MakeMyTrip, which offer both ticket-booking and hotel reservations, Stayzilla solely focussed on room bookings.
According to VCCEdge, the data research platform of News Corp VCCircle, Stayzilla had raised close to $30 million from Nexus Venture Partners and Matrix Partners, besides an undisclosed amount in a Series A round.
“It is important for companies to be proactively litigious when they find issues with vendors. Because under this act, the vendors can become operational creditors and take the companies to insolvency,” Vasupal told VCCircle, adding that the act is draconian and biased against companies.
In March, Vasupal was arrested by the police following allegations of non-payment of dues by Jigsaw Advertising, and was granted bail in April. Vasupal’s wife and Stayzilla co-founder Rupal Yogendra had then alleged that she and her family were being threatened by the owners of the advertising agency.
“Now that the liability has been established by the court order, wonder what they would have to say now. Crying foul and faking to be the victim would work on social media, perhaps, but not in a court of law,” Jigsaw owner Aditya CS told VCCircle
However, Vasupal, who is planning his next move, may not give up so easily and this might just prove to be the beginning of a prolonged legal battle. Leave Your Comment