NCLT orders insolvency proceedings against Stayzilla for payment defaults
In a massive setback to online homestay startup, Stayzilla, the National Company Law Tribunal (NCLT) ordered insolvency proceedings against it. The Chennai bench of the NCLT, on Monday, said that the company had defaulted in payments to JigSaw Solutions and ordered for insolvency proceedings to begin.
"We are satisfied that the corporate debtor (Stayzilla) has committed default in the payment. We order the commencement of the corporate insolvency process which shall get completed within 180 days, reckoning the day this order is passed," the order of the NCLT read.
During the previous hearing of the case on Friday, technical member of NCLT, S Vijayaraghavan and judicial member Ch Mohd Sharief Tariq had held that Stayzilla had defaulted in making payment of outstanding debt to its corporate creditor, JigSaw Solutions.
While Stayzilla and its CEO Yogendra Vasupal can file an appeal, the court order directs for the insolvency proceedings to be completed within 180 days. The startup was founded by Yogendra Vasupal, Sachit Sanghi and Rupal Yogendra in 2006. It ran into trouble after its corporate creditor Jigsaw initiated criminal proceedings over payment default. After considering arguments from both sides, the court ordered the commencement of the Corporate Insolvency Resolution process.
The order also prohibits Stayzilla from transferring, encumbering, alienating or disposing of any of its assets. The NCLT order also prohibits the company from recovering of any property by an owner or lessor where such property is occupied by or in the possession of the company.