The National Company Law Tribunal (NCLT), the regulatory body for liquidation and insolvency of Indian companies, has called for expression of interest from potential bidders to sell off the defunct startup Stayzilla. Following this development, Stayzilla has become the first startup to be tired under the insolvency and bankruptcy code.
The NCLT’s application categorically states that “the applicants should have a net worth of 50 crore or more as of March 31, 2018 and the ability to infuse minimum of 20 crore cash in the company.” As per the order, the resolution period for Stayzilla ends on July 30, 2018. In case if no resolution plan arrives before the stipulated date, the company will be liquidated.
Analysts claim that apart from few intellectual properties, Stayzilla does not offer much value to investors and potential bidders.
Stayzilla forced to pull down shutters amid much drama
Incorporated in 2006, Stayzilla was an online hotel aggregator platform that allowed visitors to book hotel accommodations at highly affordable prices. It also offered homestay solutions as it tried to enact Airbnb’s success in India.
Since Stayzilla was backed by marquee investors like Matrix Partners and Nexus Ventures Partners, the company’s co-founders had every reason to believe that they stood a good chance to make a profitable venture. However, in 2016 market realities caught up with Stayzilla as it failed to gain much market tractions and investors obviously decided to leave the company high and dry.
With losses piling up and no hope of any fund raising, Stayzilla decided to wind up its operation in February last year. By this time the news of fund-starved Indian startups pulling down shutters had become common news. But what followed in Stayzilla’s case after pulling down the shutter was unprecedented as one of its co-founder Yogendra Vasupal was arrested and put behind bars.
Vasupal’s arrest was the result of Stayzilla’s failure to clear off dues to one its advertising vendors. The co-founder was later released on bail.