Offshore legal action raises fresh questions over the B2B unicorn's financial restructuring, while the company assures that its India operations, customers, employees, and business remain unaffected.

B2B ecommerce platform Udaan has entered a fresh phase of financial restructuring after insolvency proceedings were reportedly initiated against its Singapore-based holding company, Trustroot Internet Pvt. Ltd., following the maturity of $170 million worth of compulsorily convertible notes. The legal action comes after restructuring negotiations between the company and its offshore creditors reportedly failed to reach a mutually acceptable agreement.

Despite the development, Udaan has clarified that the proceedings relate solely to its overseas holding entity and have no impact on its operating businesses in India. The company stated that its ecommerce marketplace, supply chain network, and financing arm, UdaanCapital, continue to operate normally while serving businesses across the country.

The development comes at a critical stage as the Bengaluru-based startup continues efforts to strengthen its balance sheet, improve profitability, and prepare for a future public listing.

Offshore Holding Company Under Legal Scrutiny

According to reports, creditors have approached the Singapore High Court seeking insolvency proceedings against Trustroot Internet Pvt. Ltd. after the company failed to repay $170 million in compulsorily convertible notes that matured at the end of June.

The creditors have reportedly appointed global restructuring firm Alvarez & Marsal to oversee the insolvency process after discussions over debt restructuring failed to produce an agreement.

A winding-up petition has also reportedly been filed before the Singapore court, marking an important development in the company's ongoing financial restructuring.

The legal proceedings currently remain limited to the offshore holding structure rather than Udaan's operating businesses in India.

Udaan Reassures Stakeholders

Responding to the reports, Udaan emphasised that the legal proceedings do not affect its day-to-day operations in India.

The company stated that all ongoing discussions are taking place between offshore stakeholders and relate exclusively to the Singapore holding company.

Its ecommerce platform, logistics operations, supply chain services, and embedded financing business continue to function normally without disruption.

The management reiterated its commitment to customers, suppliers, employees, lending partners, and investors, while maintaining focus on operational execution and long-term business growth.

The clarification is intended to reassure stakeholders that business continuity remains intact despite the legal developments overseas.

Fundraising Remains a Key Priority

The reported insolvency proceedings have increased the importance of Udaan's ongoing fundraising efforts.

According to market reports, the company is working with investment bankers to raise between $150 million and $200 million through a fresh equity round aimed at strengthening liquidity and supporting future expansion.

In addition to the proposed equity raise, Udaan is also exploring another financing facility of nearly $40 million, which could be backed by pledged shares.

The company had earlier secured $50–60 million from existing investors, reflecting continued confidence among long-term shareholders despite the financial challenges.

Fresh capital is expected to improve liquidity, support working capital requirements, and facilitate continued business operations.

Liquidity Challenges Continue

Reports suggest that several domestic and international lenders have recently withdrawn certain working capital facilities extended to the company.

Reduced access to short-term financing has reportedly increased pressure on liquidity, making successful fundraising and debt restructuring increasingly important.

The company has been actively working to optimise cash flows, improve operational efficiency, and strengthen its financial position while continuing to reduce losses.

Management's focus remains on balancing growth with financial discipline as India's startup funding environment becomes more selective.

Improving Financial Performance Provides Encouragement

Although funding challenges persist, Udaan has made notable progress in improving its operational performance.

According to recent financial disclosures:

• FY25 revenue stood at approximately ₹4,561 crore.

• Net losses narrowed by nearly 37% to around ₹1,055 crore.

• Cost optimisation initiatives have improved operating efficiency.

• Unit economics have strengthened across several business segments.

The company continues to prioritise sustainable growth over aggressive expansion, reflecting changing investor expectations across India's startup ecosystem.

However, cumulative losses since inception remain substantial due to years of investment-led growth.

India's B2B Ecommerce Opportunity Remains Strong

Despite the financial restructuring, the long-term outlook for India's B2B ecommerce sector remains positive.

Digital procurement platforms continue to gain traction among retailers, wholesalers, manufacturers, and small businesses seeking more efficient supply chain solutions.

India's expanding MSME ecosystem, increasing digital adoption, organised logistics networks, and embedded financial services provide significant long-term growth opportunities for B2B commerce platforms.

Companies that successfully combine technology, logistics, financing, and procurement capabilities are expected to benefit from the continued formalisation of India's wholesale trade ecosystem.

IPO Plans Could Depend on Successful Restructuring

The latest development comes as Udaan continues preparing for a potential public listing.

Before proceeding with an IPO, investors are expected to closely evaluate the company's capital structure, debt obligations, profitability trajectory, corporate governance, and cash flow position.

Successfully resolving offshore liabilities, securing fresh capital, and continuing operational improvements could become important milestones before the company advances its public market ambitions.

While the current proceedings relate only to the offshore holding entity, the outcome may influence overall investor sentiment regarding the company's financial stability.

Outlook

The insolvency proceedings involving Udaan's Singapore-based holding company represent a significant financial development, but the company has maintained that its Indian operations remain fully functional and unaffected. As negotiations with creditors continue alongside fresh fundraising efforts, management remains focused on strengthening liquidity, improving profitability, and building a sustainable long-term business.

With India's B2B ecommerce market continuing to expand rapidly, Udaan's future growth will largely depend on the successful execution of its financial restructuring, continued operational discipline, and ability to secure additional capital. Investors are likely to monitor the progress of these initiatives closely as the company works toward stabilising its balance sheet and pursuing its long-term IPO aspirations.