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The Ahmedabad bench of the National Company Law Tribunal (NCLT) has admitted a bankruptcy plea against ride-hailing startup BluSmart Mobility, marking another blow to the electric vehicle startup ecosystem. The insolvency proceedings were triggered following a petition filed by Catalyst Trusteeship, which approached the court in its capacity as a financial creditor.

The tribunal’s order, delivered on July 28, directed the commencement of corporate insolvency resolution proceedings (CIRP) against BluSmart Mobility. The court also appointed an interim Resolution Professional (IRP) — NPV Insolvency Professionals — to oversee the company’s operations and safeguard its assets during the resolution process, according to The Economic Times report.

Catalyst Trusteeship Cites Payment Default

The proceedings stem from a default in payments amounting to Rs 1.28 crore. Catalyst Trusteeship, which facilitated the issuance of bonds on behalf of BluSmart and held them for retail investors, moved the tribunal after the company failed to meet its debt obligations. Specifically, BluSmart missed two key repayments — Rs 64 lakh due on March 31, and another Rs 63 lakh due on April 30 — as per details submitted to the court.

Catalyst had earlier attempted to invoke the ‘Event of Default’ clause, seeking immediate repayment of the outstanding dues. Despite initial repayments being timely, the recent defaults prompted legal action, as per the report.

Linked Entity Gensol Also Under Insolvency

BluSmart Mobility, founded by the Jaggi brothers — also promoters of the publicly listed solar engineering firm Gensol Engineering — now follows its parent entity into insolvency. Notably, Gensol Engineering was admitted for insolvency proceedings by the same NCLT bench in June this year.

In a bid to mitigate financial stress, the resolution professional for Gensol Engineering had recently leased out around 4,000 electric vehicles operated under BluSmart in Delhi NCR and Bengaluru. These vehicles were offered on fixed monthly rentals with minimal upfront payment requirements.

Debt Burden And Financial Strain

BluSmart reportedly raised around Rs 15 crore through non-convertible debentures in 2023. It was also reported by ET in April that the company had borrowed nearly Rs 100 crore via various fintech platforms. Although a portion of this debt was repaid, a significant amount remained overdue.

The company attributed the missed payments to a temporary financial crunch and argued that there was no corporate default. However, after examining the matter, the NCLT concluded that the defaults were substantial enough to warrant insolvency proceedings.

The court has instructed the appointed IRP to assume control over all of BluSmart Mobility’s assets and manage them in a manner that maintains the value of the business as a going concern.

This development adds to the mounting challenges faced by India's EV startups amid capital constraints, delayed repayments, and increasing scrutiny from regulators and investors alike.