Builder.ai’s parent, Engineer.ai Corporation, will be “entering into insolvency proceedings” and has appointed an administrator to “manage the company’s affairs”

Viola Credit, which extended $50 Mn debt to the company last year, seized $37 Mn from Builder.ai’s accounts leaving it with just $5 Mn

CEO Manpreet Ratia said the company’s cash reserves had dwindled to about $7 Mn when he joined as a CEO in March this year, replacing cofounder Sachin Dev Duggal

Weeks after Builder.Ai admitted “problems” under its past leadership, the Microsoft-backed enterprise tech startup is now reportedly commenced insolvency proceedings.

A company spokesperson told TechCrunch that Builder.ai’s parent , Engineer.ai Corporation, will be “entering into insolvency proceedings” and has appointed an administrator to “manage the company’s affairs”.

“Despite the tireless efforts of our current team and exploring every possible option, the business has been unable to recover from historic challenges and past decisions that placed significant strain on its financial position,” the company spokesperson said.

Builder.ai added that it plans to work closely with the appointed administrators to explore all available options for “parts of the business”.

“Our immediate priority is to support our employees, customers, and partners through this difficult time. We will work closely with the appointed administrators to ensure an orderly process and to explore all available options for parts of the business, where possible,” the London-based company added.

Builder.ai and its cofounder Sachin Dev Duggal didn’t respond to Inc42’s queries on the development till the time of publishing this story.

Meanwhile, Bloomberg reported that the company was forced to consider bankruptcy after Viola Credit, which extended $50 Mn debt to the company last year, seized $37 Mn from Builder.ai’s accounts. Builder.ai CEO Manpreet Ratia said that this left the company with just $5 Mn, forcing it to lay off most of its employees.

The company’s remaining $5 Mn are said to be located in Indian accounts and cannot be used to pay workers due to restrictions on the movement of money out of the country, Ratia told Bloomberg.

Ratia, however, told FT that the company’s cash reserves had dwindled to about $7 Mn when he joined as a CEO in March this year. Thereafter, the company is said to have been able to raise $75 Mn from some of its existing shareholders to “try to fix its balance sheet”. However, with $85 Mn due in payments to Amazon and an additional $30 Mn to Microsoft, the company moved to file for bankruptcy.

Ratia also told FT that he was trying to run the business with “zero dollars” in its UK and US bank accounts in recent days, adding that creditors also seized Builder.ai’s money, which he intended to use to pay salaries, in a Singaporean bank account.

Founded in 2016 by Duggal and Saurabh Dhoot in Gurugram, Builder.ai allowed developers to build apps and websites without little to no coding knowledge using AI.

It raised more than $450 Mn in funding and counts marquee names such as Qatar Investment Authority (QIA), Microsoft, Iconiq Capital and Jungle Ventures among its backers.