B2B E-commerce Firm Udaan Faces Insolvency Proceedings Over Bond Default

Indian B2B e-commerce unicorn Udaan is engulfed in a new crisis as overseas creditors have initiated insolvency proceedings against the company due to a default on a $170 million bond. The company is reportedly struggling with multiple challenges, including down rounds in funding, substantial losses, and a declining order book.

The precipice was reached last month when Udaan's offshore holding company, Trustroot Internet, missed a repayment on convertible notes due on June 30. Following the default, lenders have filed a case in the Singapore High Court. This action comes after weeks of unsuccessful debt restructuring talks, during which lenders reportedly pressured the unicorn for upfront payments before agreeing to extend repayment terms.

In the wake of these developments, several major domestic banking partners have reportedly withdrawn working capital lines for Udaan. The legal escalation is tied to the company's deteriorating financial health. A slowdown in the B2B sector, coupled with the recent down round, has seen Udaan's valuation plummet to below $1 billion, a 69% decrease from its peak valuation of $3.2 billion in 2021. Revenue also fell 20% year-on-year to ₹4,561 crore ($550 million), with operational losses reaching a significant ₹1,055 crore ($127 million).

Amidst these troubles, Udaan is attempting to assuage user concerns, stating that the insolvency proceedings pertain only to offshore restructuring discussions and will not disrupt daily operations. The company affirms its continued commitment to serving customers across commerce and supply chain financing.