Facedrive Co-Founder Says Rideshare Startup Mulling Bankruptcy

(Bloomberg) — A founder of Facedrive Inc., a Canadian ride-hailing startup whose shares have plunged 96% since early February, said in a statement that he received notice that the company is considering filing for bankruptcy protection as soon as this month.

Imran Khan, whose share sales have been blamed by former Chairman and Chief Executive Officer Sayan Navaratnam for fueling the rout, said in a statement distributed by Canada Newswire Monday that his lawyer has been asked about his availability for a “initial hearing in a liquidating proceeding for Facedrive under the Companies’ Creditors Arrangement Act.” The statement said a final decision on such a filing has not been made.

Facedrive, Khan and Navaratnam did not immediately reply to requests for comment.

Khan’s claim that the company is edging toward bankruptcy comes after Navaratnam stepped down last week in the wake of the steep drop in the company’s stock price. In a letter to shareholders Saturday, he lashed out at Khan’s decision to sell his shares.

“Mr. Khan’s decision to sell his shares has put his own interests ahead of those of Facedrive’s investors, employees and partners,” Navaratnam said. “Mr. Khan is making millions of dollars when the people that actually built the business voluntarily restricted their ability to sell.”

The restriction on selling Khan’s shares expired in March, and in July he gave notice of his intention to start selling shares. The matter has triggered litigation among Khan, Facedrive and Navaratnam.

Facedrive set out to be a more sustainable alternative to services such as Uber Technologies Inc. by offseting carbon emissions with tree planting. It has since pivoted to food delivery, online retail and contact tracing for Covid-19.

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