Supreme Court dismisses plea challenging bankruptcy proceedings against Stayzilla

The Supreme Court on Wednesday dismissed an appeal challenging bankruptcy proceedings against shuttered homestay aggregator Stayzilla.

Petitioner Stayzilla's co-founder and chief executive, Yogendra Vasupal, told TechCircle the judgment was unfortunate.

Bankruptcy proceedings had begun in response to a petition by one of Stayzilla’s creditors, Jigsaw Advertising, filed in an insolvency tribunal. Jigsaw was Stayzilla’s vendor. Responding to the petition, the tribunal had placed, temporarily, a professional in charge of Stayzilla.

"The Supreme Court has dismissed Stayzilla's petition now. I stand vindicated," Jigsaw co-owner Aditya CS told TechCircle.

Founded in 2005 by Vasupal, Sachit Sanghi, and Rupal Yogendra, online startup Stayzilla operated in both ultra-low-budget and luxury segments to offer homestays, besides accommodations in lodges and guesthouses.

In May 2016, it claimed to have over 55,000 accommodations across more than 4,000 cities and towns in India. Unlike popular online travel agencies, such as MakeMyTrip, which offers both ticket-booking and hotel reservations, Stayzilla focused only on room bookings.

According to VCCEdge, the data research platform of News Corp VCCircle, Stayzilla had raised close to $30 million from Nexus Venture Partners and Matrix Partners between 2012 and 2015, besides an undisclosed amount in a Series A round in 2013.

However, in February last year, Vasupal had said that the company will temporarily stop operating and will “reboot with a different business model”.

“It is important for companies to be proactively litigious when they find issues with vendors. Because under law, vendors can become operational creditors and take the companies to insolvency,” Vasupal had told VCCircle, adding that the law is draconian and biased against companies.

In March 2017, Vasupal was arrested after allegations of non-payment of dues by Jigsaw. After 28 days in jail, he received bail.

Vasupal’s wife and co-founder  Rupal Yogendra had then said that she and her family were being threatened by the owners of the advertising agency.