UAE-based last mile delivery company Fetchr, is at risk of liquidation according to a report from Bloomberg, citing a letter sent from BECO Capital, one of Fetchr’s biggest backers.
The liquidation warning comes after the Saudi Tax Authority issued Fetchr with a $100 million unpaid VAT and Zakat tax bill, which the company disputes according to the BECO letter.
Fetchr almost collapsed towards the end of 2019, before securing emergency funding and a turnaround plan that focused its efforts on growth in Saudi Arabia.
Fetchr was still trying to complete its rescue fundraising when the Saudi tax authority imposed the fine according to Bloomberg.
Dubai courier app Fetchr, once among the Middle East’s most promising startups, is considering filing for liquidation after becoming “insolvent” because of a disputed tax bill in Saudi Arabia, according to one of its top investors.
It would be Fetchr’s second brush with bankruptcy after the logistics firm nearly went under around the end of 2019 but staved off collapse through an emergency funding package and a turnaround plan that involved expanding in Saudi Arabia. Fetchr was valued at almost $300 million in a 2017 fundraising round.
Fetchr was still trying to complete its rescue fundraising when the Saudi tax authority imposed a $100 million bill last summer for unpaid value-added tax and zakat, an Islamic levy, according to a letter sent recently by venture capital firm BECO Capital, a major backer of the startup, to its own investors.
The company is now “insolvent,” and an extraordinary general meeting is scheduled for Sept. 29 “to discuss the best course of action forward,” according to the letter.
“This act scared off all new investors including the current shareholder investor base,” Dubai-based BECO said. “As there doesn’t seem to be a way out, liquidation is also on the table.”
Saudi Arabia’s Zakat, Tax and Customs Authority, BECO Capital and Fetchr didn’t immediately respond to requests for comment.