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Insolvency proceedings against Stayzilla ordered by NCLT: report

The National Company Law Tribunal (NCLT) has initiated insolvency proceedings against homestays aggregator Stayzilla, reports ETtech. The report mentions that Stayzilla had argued that the insolvency proceedings, brought on by a former vendor of the company Jigsaw Solutions, should be put on hold till a final judgment is passed in the ongoing criminal case against Stayzilla founder and CEO Yogendra Vasupal. However, NCLT said that the pending criminal case didn't qualify for consideration as per sub-section (6) of section 5 under the Insolvency and Bankruptcy Code, 2016, which says: (6) "dispute" includes a suit or arbitration proceedings relating to— (a) the existence of the amount of debt; (b) the quality of goods or service; or (c) the breach of a representation or warranty; Now the Insolvency Resolution Professional appointed by the tribunal, along with a board of creditors will evaluate the claims of non-payment of dues (apparently to the tune of Rs 1.72 crore) made by Jigsaw, following which they will initiate liquidation of Stayzilla assets to settle the said dues. In March this year, Vasupal was taken into police custody after Jigsaw Solutions, a media agency, filed a case against Vasupal under sections of the law relating to criminal fraud and breach of trust. And subsequently his bail plea was rejected by a Special Court in Chennai. Around the same time as his arrest, Vasupal alleged that he and his colleagues were threatened by his landlord and that Jigsaw Solutions had framed charges against him. Stayzilla shutdown In February, Stayzilla had announced that it would be shutting down operations…

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