New Delhi, Delhi, India | 22nd November 2019: An Arbitration process is on the anvil at Singapore International Arbitration Centre (SIAC) to settle disputes arising due to breach of contract and non-payment of unpaid bills to the tune of approximately USD 10 million between the Singapore based Startup and its sourcing partner.
According to sources, Singapore headquartered Zilingo Pte Ltd. is a technology and commerce platform led by young Indian entrepreneurs – Ankiti Bose and Dhruv Kapoor – who managed huge global funding early this year. This company is being brought to Arbitration table by a Bangkok based company (sourcing partner) for Breach of Contract and holding of due payments. The sourcing partner after initiating legal action has approached for arbitration to settle the financial dispute at SIAC.
The Singapore based Company “Zilingo” got a low rating from international Rating Agency Dun & Bradstreet (D&B). In its report of October 2018, the Rating Agency had pointed out two major concerns with Zilingo. On the overall assessment of the company, the D&B found potential payment concerns and based on the financial strength, the rating agency reported low ability to pay obligations.
Ankiti Bose, Director, Zilingo Pte ltd, often dubbed as a ‘unicorn in making’ in international startup circles, received a lot of funding from lender giants like Siquoua and Temasek. The company earlier this year raised USD 226 million from investors including Sequoia Capital and Temasek Holdings Pte and is now valuing about USD 950 million.
The arbitration case might impact the Singapore Company’s expansion plan. The company plans to enter textile marketing with a focus on the Indian market. Ludhiana in India has been chosen as a base for sourcing materials.
Industry sources revealed that the Singapore Startup initially used its sourcing partners to show volumes of high transactions. Eventually, it garnered a tremendous response from global funding ventures based on these high volume projections. Partners allege that subsequently, Zilingo turned its back on its financial commitments. Facing hard times due to international trade war especially between the US and China, smaller companies find difficult to cope up with non-payment of unpaid bills. The outcome of this Arbitration may expose an unethical business module of the startup.
It is reliably learnt that Zilingo placed orders approximately worth USD 20 Million with the sourcing company till February 2018. Accordingly, the sourcing partners placed commensurate orders with their Chinese counterparts by paying them to the tune of approximately USD 10 Million. Unpaid for goods worth several million have already been delivered by the partner and that remains due to be paid by Zilingo against the said deliveries. However, the Singapore based company has denied that they are liable to pay any unpaid bills to the sourcing partner.
Under the contract between the two companies, they had agreed for arbitration of any disputes arising between the parties during the currency and termination of the said agreement by a sole Arbitrator based at Singapore under the Arbitration Rules of the Singapore Arbitration Centre. The industry is keeping a close eye on the outcome of the Arbitration as it would have an impact on small businesses in the times global economic slowdown.