Udaan’s Creditors Initiate Bankruptcy Proceedings Against Its Parent In Singapore

New Delhi, India Jul 2, 2026 ALN: IPO-bound B2B ecommerce unicorn Udaan’s global creditors have initiated insolvency proceedings against it over default on bonds. This development marks a significant moment in the company's trajectory, as it faces mounting financial pressures amidst a challenging market landscape.

A report indicated that global creditors, including banks and hedge funds, initiated insolvency proceedings in the Singapore High Court against Udaan after its offshore holding entity Trustroot Internet Pvt Ltd defaulted on $170 million in compulsorily convertible notes or bonds due on June 30. The initiation of these proceedings underscores the severity of Udaan's financial situation, as it struggles to meet its obligations to creditors.

The creditors include notable financial institutions such as Tor Investment Management, Samena Capital, Arena Investors, Catalyst Funds, Evolution, Nomura, and Standard Chartered Bank, among others. These entities have significant stakes in Udaan's financial health and have been closely monitoring the company's performance and financial strategies.

Trustroot was due to pay between $170 million to $200 million to settle the maturing notes, including the redemption premium. However, the creditors refused to accept a debt restructuring plan that Udaan sought to extend repayment. This refusal highlights the growing impatience among creditors as Udaan's financial challenges continue to mount.

According to sources, "The creditors have been trying to iron out a debt restructuring package with the company for weeks but eventually failed to reach a consensus on the amount to be paid upfront. On Tuesday, they initiated a bankruptcy process by filing a winding-up petition." The failure to reach an agreement reflects the complex negotiations that often characterize financial distress situations, where differing interests and expectations can lead to breakdowns in communication and trust.

Confirming the development, Udaan stated that the proceedings won’t have any material impact on its operations in India. An Udaan spokesperson emphasized, "The matters referenced relate to ongoing restructuring negotiations and offshore proceedings among offshore stakeholders at the offshore holding company level. These discussions have no bearing on our operating entities in India, where our teams employ our people and run the day-to-day business. Udaan and udaanCapital continue to operate as usual, serving customers across trade commerce and supply chain financing." This assertion aims to reassure stakeholders and customers that the company's core operations remain intact despite the financial turmoil at the holding company level.

Since Udaan faced a 59% dip in its equity valuation during its latest Series G round raised last year, along with mounting losses and a thinning order book, creditors were pushing the company to raise a fresh equity round before any extension on repayment could be granted. This reflects a broader trend in the startup ecosystem, where investors are increasingly cautious and demanding more stringent terms in the face of economic uncertainty.

Udaan has been working with Goldman Sachs for a $150 million to $200 million equity funding but has struggled to attract investor interest. This difficulty in securing additional funding is a critical factor in the company's current predicament, as a lack of liquidity can severely hinder operational capabilities and growth prospects. It has also been in talks with financial institutions like BlackRock to secure a $40 million credit facility in return for pledging shares, indicating a reliance on short-term solutions to manage immediate financial pressures.

In May, Udaan reportedly closed a $50-60 million top-up funding round from existing investors M&G Prudential and Lightspeed Venture Partners. While this infusion of capital may provide some temporary relief, it does not address the underlying issues that have led to the current insolvency proceedings.

According to the original agreement, the convertible notes were set to turn into equity shares of Udaan if it had listed on public markets by now. The expectation of an IPO has been a significant factor in the company's strategic planning and financial arrangements. However, while the unicorn has received approval to consolidate its various entities under a single business, the Singapore holding company Trustroot is yet to redomicile in India, which complicates its financial and operational structure.

Ahead of the court proceedings, lenders of Udaan’s India unit, including JP Morgan, HSBC, DBS, and Axis Bank, withdrew working capital lines to Udaan. However, sources close to the company stated that all working capital lines with banks were paid and closed months ago. This discrepancy highlights the often opaque nature of financial dealings in the startup sector, where perceptions and realities can diverge significantly.

Founded in 2016 by former Flipkart executives Sujeet Kumar, Amod Malviya, and Vaibhav Gupta, the Bengaluru-based startup began by connecting retailers to wholesalers and brands through marketplaces but later expanded operations to logistics and warehouses. This initial business model was designed to capitalize on the growing demand for streamlined supply chains in India's burgeoning retail sector.

Through its marketplace arm, retailers can discover suppliers, compare prices, and place bulk orders. Its logistics arm, Udaan Express, powers the supply chain and delivery network, while its fintech vertical, udaanCapital, offers working capital and invoice financing to retailers. With the acquisition of ShopKirana last year, Udaan deepened its presence in retail tech and last-mile distribution, aiming to create a more integrated ecosystem for its users.

However, the struggles of the B2B ecommerce segment in the country complicated Udaan’s position. In FY25, the startup’s revenue declined 20% year-on-year to ₹4,561 crore, while losses dipped 37% to ₹1,055 crore. These financial results reflect the broader challenges faced by many companies in the ecommerce space, particularly as competition intensifies and consumer behavior shifts.

During its last reported fundraise of $114 million in June 2025, its valuation dipped nearly 59% from its peak of $3.2 billion to around $1.3 billion. Reports indicate that the round closed in May brought this down further to around $800 million to $1 billion, marking a more than 69% decline from its peak valuation. Such a dramatic decrease in valuation not only impacts investor confidence but also complicates future fundraising efforts and strategic planning for the company.

The situation at Udaan serves as a cautionary tale for startups in high-growth sectors, illustrating the potential pitfalls of rapid expansion and the importance of maintaining financial discipline amidst aggressive growth strategies. As Udaan navigates these turbulent waters, its ability to restructure effectively and regain investor confidence will be critical for its long-term viability and success in the competitive B2B ecommerce landscape.