Zilingo cofounders Dhruv Kapoor and Ankiti Bose have come together to take back control of the fashion ecommerce business, in a bid to avoid liquidation, according to two persons with knowledge of the deal.
On Sunday, Kapoor tabled a 'preliminary and non-binding offer' proposing to pay off the $48 million outstanding debt owed to Varde Partners and Indies Capital, and infuse $8 million in fresh equity into the company, with the help of an investor group backing this deal. The offer was supported by cofounder Bose.
It does not yet propose a sum to buy out existing investors, but is offering to negotiate shareholding with existing investor group. Existing investors include Sequoia Capital and Temasek Holdings.
Merchant banker Strand Hanson is brokering the transaction and is negotiating with distressed investors to put together a deal on behalf of the cofounders.
Zilingo and Sequoia declined to comment while Strand Hanson did not respond to requests for comments.
"As founders it is our ultimate responsibility to make sure that we do whatever it takes to make sure the lights stay on at Zilingo and in the homes of the hundreds of people who are part of it. No matter what our differences may be, at the end of the day we started this company with the same goal. Today we have come together to fight for that same goal,” Bose said in a statement. Kapoor declined to comment.
The company has been mired in a controversy since March when co-founder Bose was suspended pending an investigation. The company’s investors suspected Bose of financial irregularities and appointed Kroll to run an investigation.
Following the investigation, Ziligo fired its chief executive Bose on May 20. It also said that it was evaluating options to pay off lenders.
The proposal comes ahead of a board meeting on Monday to discuss the voluntary liquidation of Zilingo that will involve the company selling its assets to pay off debtors.