BluSmart files for insolvency amid corporate governance crisis, debt woes

BluSmart Files for Insolvency Over Debt Defaults and Governance Issues.

Expert Analysis :

• Insolvency Proceedings Initiated: BluSmart has initiated insolvency proceedings following a regulatory probe accusing a co-founder of misappropriating funds meant for vehicle purchases

• NCLT Appoints IRP and Directs Cooperation: The Ahmedabad NCLT appointed NPV Insolvency Professionals as IRP to manage BluSmart’s operations and assets as a going concern and ordered full cooperation from promoters and management until a resolution plan is finalised.

• Promoter Background and Related Insolvency: BluSmart Mobility was founded by the Jaggi brothers, who also promoted Gensol Engineering, which was admitted into insolvency by the same NCLT bench in June.

• Gensol Fleet Leasing Update: Gensol’s resolution professional leased out its 4,000-vehicle fleet across Delhi-NCR and Bengaluru on a fixed monthly rental model with a nominal upfront payment.

• Debenture Defaults Noted: In 2023, BluSmart raised ₹15 crore through non-convertible debentures; while initial repayments were mostly timely, it defaulted on ₹64 lakh due on March 31 and ₹63 lakh on April 30, as per tribunal filings by the debenture trustee.

• Additional Borrowings: The company also borrowed around ₹100 crore from fintech platforms. A large portion remains unpaid.

• Tribunal Confirms Default Despite Company Denial: BluSmart cited financial constraints and denied corporate default, but the tribunal reviewed the case, confirmed a default, and admitted it for insolvency.