The National Company Law Tribunal (NCLT), Chennai has ordered online homestay startup Stayzilla to become insolvent and pay the outstanding dues to JigSaw Advertising and Solutions. It was hearing the insolvency petition filed against Insara Technologies, the parent company of Stayzilla, that was filed by its vendor JigSaw.
After both sides made their arguments, the Tribunal has observed that based on the facts and circumstances of the case and the submissions made by both the counsels, it is established that Stayzilla has defaulted in the payment of the outstanding debt to JigSaw along with interest.
The court has ordered commencement of the Corporate Insolvency Resolution process.
“I had filed an insolvency petition under the insolvency and bankruptcy code. The Tribunal has passed an order saying they do owe me money and since they haven’t paid my debt, they have appointed an interim resolution professional (IRP) to take over the assets of the company, liquidate it and pay off all the debts they have. Not sure if my debt will be paid back entirely. Will cross the bridge when it comes,” Aditya CS of Jigsaw told The News Minute.
As per the Tribunal’s order, the IRP will take charge of Stayzilla’s management immediately to initiate the process, which has to be completed within 180 days.
“He is also directed to cause public announcement as prescribed under Section 15 of the I&B Code, 2016, within three days from the date the copy of this order is received and call for submissions of claim in the manner as prescribed,” the order states.
The order also prohibits Stayzlla from transferring, encumbering, alienating or disposing any of its assets. It is also prohibited from recovering of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor, which in this case is Stayzilla.
Reacting to the Tribunal’s order, Yogendra Vasupal, CEO and co-founder of Stayzilla said, “I am shocked. It’s important for companies to be proactively litigious when they find any issues with vendors. This act is biased against companies and under this act, vendors can become operational creditors and take the companies to insolvency. I hope for the future of the business in India, this act gets more judicious in its application over time and in the meantime the companies take note to be proactively litigious.
Stayzilla suspended operations on February 24, 2017, claiming that it will restructure itself and reboot operations. Following this, Aditya CS of Jig Saw claimed that the company did not pay him his dues to the tune of Rs 1.7 crore since January 2016 and filed a case against Vasupal and CFO Sachit Singhi.
Vasupal was then arrested on March 14. The night before his arrest, Vasupal had also put out a blog saying he was being harassed by his landlord and by Jig Saw Solutions. Voodoo dolls were allegedly sent to the CFO's house.
The battle, which started with Vasuapl’s arrest and his claims of being harassed by Aditya, got ugly after Aditya publicly put out what he claimed was proof that the company owed him Rs 1.7 crore.
After Vasupal received bail a month later, he then furnished proof of Aditya cheating them with photoshopped pictures as proof of delivery for Stayzilla’s advertising campaign.
Vasupal had said that once the court proceedings are done, he plans on bringing Stayzilla back as a B2B player.