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ReshaMandi Slashes 80 Percent Of Staff Amid Fund Crunch

By Nithya Bose in Business News, posted June 21, 2024

ReshaMandi, a B2B marketplace specialising in silk products, has laid off 80 percent of its workforce due to a fund crunch.

Since last year, the company has struggled to secure Series B funding, leading to significant downsizing.

With over Rs 300 crore in debt, ReshaMandi faces multiple court cases from lenders and vendors, and some creditors are considering filing for insolvency, according to two officials familiar with the situation.

Founded in 2020, ReshaMandi has built a full-stack digital ecosystem for natural fiber, spanning from farm to fashion in the agritech sector.

The company has hit a financial roadblock despite raising about $70 million in equity and debt from investors, including Creation Investments and Omnivore.

Its last funding round of Rs 225 crore included equity and debt.

It included participation from Omnivore, 9 Unicorns, Venture Catalysts, Sandeep Singhal of Nexus, and IndiaMART founder Brijesh Agarwal.

Debt investors included Northern Arc, Innoven Capital, and Stride Ventures.

The company's valuation has plummeted from $175 million to $25 million when it attempted to raise $5 million in January.

Despite these efforts, ReshaMandi was unable to secure additional funding.

One creditor, planning to file for the company’s insolvency, highlighted the severity of the financial situation.

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LegalPay, a tech-based interim financier and litigation funder for commercial litigations, noted that resolving a distressed company under the Insolvency and Bankruptcy Code (IBC) takes an average of 632 days, exceeding the stipulated 270 days.

The process takes about 541 days for companies filing for voluntary bankruptcy.

Kundan Shahi, CEO of LegalPay, said: "Self-initiation of insolvency has both pros and cons.

“On the positive side, it enables timely action to protect the business, halts legal proceedings, and can lead to creditor settlements.

“However, it also risks losing control of the company, potential liquidation, and a decrease in asset value."

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