As e-commerce website AskMe’s parent Getit Infoservices Pvt. Ltd heads for an auction intended to end its insolvency, there seems little hope of any recovery of dues for its vendors, sellers, employees and creditors, said three people in the know.
The auction of the e-commerce company's assets would not help pay off its creditors even a fraction of the estimated Rs 460 crore the company owes them, according to the persons.
Getit was shut in August 2016 after a bitter public battle between Malaysia-based investor Astro Malaysia Holdings Berhad and the management led by Sanjiv Gupta, former chief of beverage company Coca-Cola India. A volley of charges and counter-charges led to a long legal dispute that resulted in an order appointing a liquidator for Getit.
The sudden shutdown of Getit had left its 4,000 employees without jobs. The company owes them Rs 80 crore to Rs 100 crore in unpaid salaries for three months, gratuity, bonuses and other perks, according to two of the three persons mentioned above.
Getit also owes around Rs 50 crore to sellers on the e-commerce platform. Big technology and advertisement vendors such as social media player Facebook, online search giant Google, information technology firm HCL Technologies Ltd, advertising firm JWT India and a number of logistics players have dues worth Rs 300 crore to be recovered from Getit.
‘Lifting the corporate veil’
The court-appointed liquidator is now in the process of initiating an auction. “The only attraction for a potential buyer is the tax credit the company has received for the losses,” said one of the persons cited above.
Getit had Rs 1,800 crore of book losses, which could save the potential buyer Rs 500-600 crore in taxes, according to an investor pitch made by the management to potential buyers in May 2016, when the company was nearing shutdown. “That is a theoretical possibility as of now,” the person added.
Another possibility is the liquidator exercising ‘lifting the corporate veil’ option, under which the liabilities of a company are treated as the liabilities of its shareholders. In this case, Astro, which holds a 98.5% stake in the company, could be held liable.
However, the Malaysian company sees the management led by Sanjiv Gupta as responsible for the shutdown. “As stipulated in the subscription and shareholding agreement, the responsibility for the management of the company was entirely that of the promoter group and the principal chief executive roles were held by Sidharth Gupta and then by Sanjiv Gupta," Astro had said in the petition filed in the Delhi High Court in December 2016.
Astro and Sanjiv Gupta did not respond to queries for this article.
“A just solution for employees, sellers and vendors depends on how creative the legal authorities would be,” said the person cited above.