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NCLT Ahmedabad initiates insolvency proceedings against BluSmart

Entrackr · 27d ago

Medial

NCLT Ahmedabad initiates insolvency proceedings against BluSmart BluSmart Mobility, the electric vehicle ride-hailing startup, has been admitted into insolvency proceedings by the National Company Law Tribunal (NCLT), Ahmedabad, following a creditor petition filed by Catalyst Trusteeship. The tribunal’s order, delivered on July 28, comes as a blow to BluSmart and adds to the growing turbulence faced by the Gurugram-based company. According to tribunal records reviewed by Entrackr, the insolvency process was initiated after BluSmart defaulted on servicing its Rs 15 crore debt raised through 15 secured, redeemable non-convertible debentures (NCDs) issued in April 2023. Catalyst Trusteeship, acting as debenture trustee for InCred Credit Opportunities Fund-I, pointed out that BluSmart was required to redeem the NCDs in equal principal installments. However, repayments were delayed and the company ultimately defaulted on payments totaling over Rs 1.28 crore for the March and April 2025 installments, which breached the Rs 1 crore threshold for triggering action under India’s insolvency law. BluSmart’s counsel tried to defend the company, claiming payment delays were temporary and due to commercial circumstances rather than a genuine inability to pay. The company also flagged procedural issues in the proceedings, including confusion over the dates of default and initial filing defects. Its representatives argued that the petition was a tactic for debt recovery, especially since a related interim regulatory order from SEBI had been issued against BluSmart’s group company, Gensol Engineering, and its promoters just weeks earlier. The NCLT, however, dismissed these objections after considering all evidence, including bank statements, board resolutions, official notices, and a key email from BluSmart’s founder on April 10, 2025, admitting the company’s liability. The bench noted that the existence of the debt and persistent defaults was beyond doubt, and technical objections could not override the substantive lack of payment. It further clarified that regulatory proceedings against related parties did not affect its assessment of the company’s own solvency position. The tribunal admitted the insolvency petition and appointed NPV Insolvency Professionals as the Interim Resolution Professional (IRP). It placed a moratorium prohibiting all legal and recovery actions against BluSmart and directed the IRP to take over management and invite claims from creditors while continuing to operate the ride-hailing business as a going concern through the resolution process. Creditors now have the opportunity to submit revival proposals, but in the absence of a workable plan, BluSmart could be headed for liquidation. BluSmart, once a promising EV ride-hailing startup, has already suspended operations across Delhi-NCR, Bengaluru, and Mumbai since April 2025 after SEBI barred its founders over fund misuse allegations. Over 10,000 drivers were left jobless and unpaid, while customers are still waiting for wallet refunds despite the 90-day promise. The app remains non-functional, and lenders are now planning to sell off 1,500–2,000 EVs. New players like Evera Cabs are absorbing some of the fleet and drivers. Meanwhile, legal proceedings and a forensic audit are underway.