Zilingo founders propose to buy out shareholders, incorporate new entity

Zilingo founders Ankiti Bose and Dhruv Kapoor have filed a management buyout proposal for the troubled fashion ecommerce company’s shareholders. If the proposal goes through, it would mean that former CEO Bose – who was fired from Zilingo last month – will return to the company, a source with direct knowledge of the situation told Tech in Asia.

The proposal, which Tech in Asia has reviewed, comes ahead of a board meeting to decide the company’s future.

“As founders, it is our ultimate responsibility to make sure that we do whatever it takes to make sure the lights stay on at Zilingo and in the homes of the hundreds of people who are part of it,” said Bose in a statement. “No matter what our differences may be, at the end of the day we started this company with the same goal. Today, we have come together to fight for that same goal.”

The news was first reported by Inc42. Tech in Asia has reached out to Zilingo for comment.

Zilingo’s co-founders (from left): CEO Ankiti Bose and CTO Dhruv Kapoor / Photo credit: Zilingo

As set out in the proposal, the management buyout’s target business is the subsidiaries, assets, debt obligations, contracts and key employees of Zilingo Pte. Ltd. that comprises the following verticals: Z Factory, Z Sourcing, Z Connect/Z Digitize, Z Trade, and Z Spotlight.

The target business’ ownership will then be transferred to a newly incorporated entity, in which the new investor group will commit US$8 million in equity.

Zilingo’s remaining assets will be liquidated in due course, with proceeds applied towards repayments to lender Zorro Assets Ltd. After that, there will be a 36-month moratorium on debt repayment.

The company’s exact structure will be finalized by the investor group based on discussions with directors, shareholders, and lenders. The new investor group is also willing to negotiate granting equity in the new entity to Zilingo’s current shareholders “on a mutually agreed basis.”

The composition of the new investor group is currently unclear. Tech in Asia‘s source says that the names will be disclosed “soon,” adding that the group was put together by Strand Hanson, a UK-based investment bank.

Bose and Kapoor will also hire new C-suite executives. However, the two founders have not decided on whether to keep using the Zilingo name, says the source.

“I firmly believe in the company’s core proposition and believe that given time and the right team, the company’s operations can be revived in due course,” said Kapoor in the document, which was emailed to shareholders and others earlier this evening. “This will reinstate value for lenders and shareholders of the company. The management buyout proposal attached here is reflective of this belief and commitment.”

Bose replied to Kapoor’s email, saying that she “endorses this proposed management buyout plan with this investor group and encourage all shareholders of Zilingo to see beyond the personal differences here and do what’s right.”

This story is developing. Check back for updates.