BluSmart files for insolvency amid corporate governance crisis

Electric taxi operator BluSmart has begun insolvency proceedings amid rising corporate governance concerns, according to a Reuters report. The development comes after a regulatory probe that accused a co-founder of misappropriating funds intended for vehicle purchases, according to the firm overseeing the resolution process.

The Ahmedabad bench of the National Company Law Tribunal (NCLT), in its ruling, named NPV Insolvency Professionals as the interim resolution professional (IRP) and directed them to take charge of BluSmart’s operations and assets while maintaining it as "a going concern". It also ordered the company’s promoters and management to extend full cooperation during the insolvency proceedings until a resolution plan is finalised, according to a report by The Economic Times.

BluSmart Mobility was established by the Jaggi brothers, who also promoted Gensol Engineering, a publicly listed solar engineering firm. Notably, the same NCLT bench had admitted Gensol into insolvency proceedings in June.

The resolution professional appointed for Gensol recently placed its fleet of 4,000 vehicles on lease across Delhi-NCR and Bengaluru, offering them on a fixed monthly rental model with a nominal upfront payment.

BluSmart’s debt obligations

In 2023, BluSmart Mobility secured ₹15 crore via non-convertible debentures. Although initial repayments were largely timely, amounts of ₹64 lakh due on March 31 and ₹63 lakh on April 30 were not paid, as per tribunal filings submitted by the debenture trustee.

The company had also borrowed around ₹100 crore through various fintech platforms. While part of this debt was settled, a significant portion remained unpaid.

BluSmart attributed the delays to financial constraints and denied any corporate default. However, after reviewing the matter, the tribunal ruled that the case met the criteria for admission and confirmed that a default had occurred.