US prosecutors have requested financial documents and other records from Builder.ai, indicating that the AI company was under legal probe before entering insolvency. According to an internal email seen by Bloomberg, Builder.ai’s general counsel Adi Vinyarsh, instructed employees to preserve relevant documents following a subpoena from the US Attorney’s Office for the Southern District of New York. This request sought information on accounting policies and customer lists.
The subpoena sought details following reports of a leadership shake-up and financial instability in the London-based company, the publication added. On 8 May, Vinyarsh communicated to employees about the subpoena, a development aligned with earlier reports of financial discrepancies. However, the US Attorney’s Office in Manhattan declined to comment on the matter. Builder.ai did not immediately respond to Bloomberg inquiries.
Sachin Dev Duggal, the company’s founder and ex-CEO, who stepped down from his position in February, was not mentioned in the subpoena-related email. Subpoenas, such as the one issued, typically indicate a request for information as part of a broader inquiry.
Builder.ai initiates operational wind-down
Established more than ten years ago, Builder.ai offered a platform to enable businesses to develop custom websites and smartphone applications. It filed for insolvency last week, blaming historic challenges and past decisions. After filing for insolvency, the company’s new CEO, Manpreet Ratia, informed employees that senior lenders had declared Builder.ai in default and seized its cash reserves. It has now begun winding down operations under the supervision of an appointed administrator.
The decision followed a recent revision of its revenue figures and acknowledgement of issues under previous management. Allegations from former employees suggested the company had consistently overstated its sales figures. The firm went bankrupt after a group of creditors led by Israeli firm Viola Credit took control of most of the company’s cash after it was revealed that revenue forecasts had been overstated by 300%.
Notably, Builder.ai was valued at approximately $1.5bn following a 2023 fundraising round led by the Qatar Investment Authority. Microsoft had also invested in Builder.ai as part of a strategic partnership. It also attracted investments from entities such as the World Bank Group’s International Finance, Hollywood executive Jeffrey Katzenberg’s WndrCo, Lakestar, and SoftBank Group’s Deepcore incubator.
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