Corporate Struggles Lead to BluSmart's Bankruptcy, Citing Governance Issues
BluSmart Mobility, an electric cab firm based in India, has entered insolvency proceedings after defaulting on dues totaling approximately ₹1.28 crore (around $147,500), primarily non-convertible debenture repayments due in March and April 2025. The Ahmedabad bench of the National Company Law Tribunal (NCLT) admitted the petition filed by Catalyst Trusteeship, the financial creditor and bond trustee, and appointed NPV Insolvency Professionals Pvt. Ltd. as the Interim Resolution Professional (IRP) to oversee the process.
The insolvency proceedings against BluSmart come at a time when corporate governance issues have surfaced, with a regulatory probe accusing co-founder Anmol Singh Jaggi of misappropriating funds intended for vehicle purchases. This allegation, if proven, raises concerns about misuse of funds and management lapses.
Jaggi, a key shareholder and co-founder, acknowledged the payment default via email but failed to fulfill the promised repayments. The tribunal overruled BluSmart's defenses, citing Supreme Court precedents and evidence including the Debenture Trust Deed and SEBI records.
The tribunal imposed an immediate moratorium, freezing all recovery, asset transfer, and enforcement actions against BluSmart. The IRP will now invite resolution plans from potential investors within the allotted Corporate Insolvency Resolution Process (CIRP) timeframe (up to 330 days) to salvage the company; failure to find a viable plan may lead to liquidation.
It is not mentioned if any legal action has been taken against Jaggi in relation to the alleged misconduct. However, this is not the first time SEBI (Securities and Exchange Board of India) has conducted a probe against Jaggi, as he was previously involved in alleged misconduct.
Jaggi allegedly diverted funds from his publicly listed affiliate, Gensol, for personal use, including the purchase of a $5 million luxury apartment and a golf set worth $30,379. The details of the alleged misconduct by Jaggi are not specified in the article.
BluSmart was founded by the Jaggi brothers, also promoters of Gensol Engineering, which is under related insolvency proceedings. Anmol Jaggi, co-founder of BluSmart, was suspended from operations in April after SEBI barred him from the securities market. It is unknown if Jaggi has responded to the allegations against him.
In response to the petition, BluSmart argued that it was premature. However, the principal debt of BluSmart exceeds 10 million rupees, making the insolvency proceedings a necessary step to address the financial issues facing the company.
The ongoing probe against Jaggi and BluSmart may have implications for the insolvency proceedings, but the exact impact remains to be seen. The insolvency proceedings against BluSmart serve as a reminder of the importance of corporate governance and the consequences of financial mismanagement.
- The financial woes of BluSmart Mobility, a company in insolvency proceedings, are tied to its business issues, as the defaulted dues primarily consist of non-convertible debenture repayments.
- The allegations against co-founder Anmol Singh Jaggi, such as misappropriation of funds and diversion for personal use, raise questions about the financial integrity of the BluSmart business and the need for robust corporate governance.
