BluSmart rescue hit by assets outside insolvency process

BluSmart's bankruptcy case has run into a maze—the court-appointed resolution professional says the electric taxi operator's most valuable assets, its cars and technology, are locked in subsidiaries outside the insolvency process, making it harder to get a fair valuation for creditors.

- Ayaan Kartik & Manas Pimpalkhare

The insolvency proceedings against the company started on 29 July after the National Company Law Tribunal (NCLT) admitted a petition filed by a creditor—Catalyst Trusteeship—on 13 May.

Ritesh Kumar Adatiya, the interim resolution professional (IRP) appointed by the NCLT's Ahmedabad bench, wants to pull the group's tangled structure under one umbrella to get a decent valuation.

But there is a rub—legal experts say that by law, subsidiaries, even if wholly owned, are not automatically made part of the insolvency resolution plan of a holding company. Such a scenario might cause problems for lenders in recovering their dues from BluSmart.

Adatiya, director at NPV Insolvency Professionals Pvt. Ltd, told Mint that most of BluSmart Mobility Ltd's assets like cars and technology are held by various small subsidiaries that are facing their own issues.

"With the due permission from committee of creditors (COC) and NCLT, to get the maximum valuation for the creditors of all the companies, it would be ideal to club all the subsidiaries together along with the parent BluSmart Mobility Ltd and then take the resolution process ahead," Adatiya said.