London-based Builder.ai, the artificial intelligence startup backed by Microsoft and the Qatar Investment Authority, announced that it is filing for bankruptcy.
The announcement comes after the company’s CEO, Manpreet Ratia, said a major creditor had seized most of its cash.
What happened?
In October 2024, Builder.ai secured a $50M (approximately €44M) loan from Viola Credit.
However, in May 2025, Viola seized $37M (approximately €32.6M) from the company’s accounts, leaving only $5M (approximately €4.4M), which was restricted due to currency controls in India.
This action left the London company unable to meet payroll and other financial obligations
Exaggerated sale by 300%
The company’s financial difficulties were worsened by the discovery that it had considerably overstated its revenues.
In 2024, Builder.ai projected revenues of $220M; however, actual sales reached only about $55M, resulting in a staggering difference of 300 per cent, reports Bloomberg.
This misrepresentation caused a significant loss of trust among investors and creditors.
Founder Sachin Dev Duggal stepped down as CEO earlier in 2025, retaining a position on the board.
He was succeeded by Manpreet Ratia, who attempted to steer the company towards financial stability.
Despite efforts to reduce operating expenses and improve margins, the sudden withdrawal of funds by lenders proved impossible.
Leaked Memo from CEO Manpreet Ratia
In a memo obtained by Sifted, CEO Manpreet Ratia detailed the events leading to the bankruptcy:
“Since the leadership reset in March, we made real progress. Operating expenses were reduced from $40M to $21M per quarter. Margins improved more than 5x. Cash burn (excluding one-offs) was halved from $32M to $16M. We had $7M in new bookings ready for contract execution and had already achieved 74% of our Q2 revenue target with half the quarter still to go. But despite this turnaround, last week our senior lenders took unexpected and irreversible action. This is an extremely unfortunate outcome, particularly given the significant strides we’ve made to turn the business around over the past few months.”
“To give you the full picture – in October 2024, Builder.ai drew down a $50M secured debt facility from a consortium of lenders; Viola Credit, Attempo, and Cadma. During the rescue financing $75M insider round in March 2025, we worked closely with the lenders to restructure this facility. They also gave repeated verbal assurances of their support for the turnaround.”
“Regrettably, those assurances were not honoured.”
“Last week, the lenders cited technical covenant breaches, swept over $40M in cash from our accounts, and restricted all access to funds, effectively shutting down our ability to operate. Most critically, this left us unable to meet payroll or other operational commitments due this week. Despite ongoing engagement, they insisted on full repayment, leaving the Board with no viable options. More critically, by enforcing this action, they have jeopardized the AWS payment plan, under which we had negotiated a 50% discount on $88M in overdue payables. The plan was structured to be cleared in four installments of $10M each over the next 18 months. As a result, we are now in breach of this agreement as well.”
“After exhausting all paths, we had no choice but to initiate insolvency proceedings.”
“We are now working with the administrators to manage the transition in an orderly way – to protect customers, employees, and any remaining value in the business. We’re also ensuring that all IP and data obligations are handled appropriately, and we will support any interest in acquiring assets or business lines where possible.”
“This is not the end we worked for, and I want to sincerely thank you for your belief, commitment, and backing during the journey. We’ll keep you updated as the process continues.”
The London company is now working with administrators to manage the transition smoothly.
“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,” says the company in a LinkedIn post.
