Sonata Software files bankruptcy petition against US retail client over $10.65 million dues
BENGALURU: Sonata Software Ltd has filed an involuntary bankruptcy petition in a US court against a retail customer for unpaid dues of approximately $10.65 million; This amount is equivalent to roughly 6.6% of the company’s incremental revenue in the last fiscal year.
The claim underscores the financial risk from a customer decline in Sonata’s retail segment, which contributes about $100 million, or 8% of the company’s revenue, and comes as the firm is also grappling with a reduction in business from Microsoft Corp.
On March 6, the Indian software services company filed a petition with the Delaware district bankruptcy court against OBSA Operating Company LLC, seeking $10.65 million in damages for nonpayment of dues. A day later, Sonata notified the Indian stock exchanges about this move.
“We would like to inform you that Sonata Software North America, Inc (“SSNA”), a subsidiary of the Company, has initiated litigation against a customer of SSNA to collect accounts receivable and damages,” the company said in its March 7 statement. he said.
Minnesota-based OBSA is a retail and financial services company that primarily operates the e-commerce brand Fingerhut.
Sonata Software filed an involuntary petition against OBSA; This means Sonata is asking the courts to initiate bankruptcy proceedings against the company. The validity of the petition will be decided by the Delaware court.
If the court finds Sonata’s lawsuit justified, a receiver will likely be appointed to oversee the sale and distribution of OBSA’s assets to creditors. If the court rejects the petition, Sonata may not receive $10.64 million in compensation and dues. For now, Sonata has taken both scenarios into account.
“The Company has reviewed its risk exposure in relation to the above development, including receivables and existing contractual hedging. However, we expect the Q3 26 PAT to still increase compared to Q26 due to certain other one-time offsetting factors, and Revenues are also expected to be in line with the guidance provided during the February 6, 2026 earnings call,” Sonata’s filing with the stock exchanges reads.
The company closed last year with a revenue of $1.2 billion, an increase of 15.5% on an annual basis. Almost half of its revenue comes from selling software licenses.
Analyst opinion
At least one expert said the case could take time to resolve.
“I must note that the prospects for a timely resolution are uncertain and the cash impact will likely be significantly delayed regardless of the strength of the case,” said Peter Bendor-Samuel, founder of Everest Group. He added that the legal action may be seen as a nice gain, but it is a structural flaw.
A similar issue was flagged by Sonata management in a post-earnings call with analysts last month. Mint was unable to independently determine whether the retail customer in the reference was actually OBSA.
“Very recently, one of our large retail customers experienced an unexpected decline. We have continued to work with the customer on revised terms and conditions,” Samir Dhir, general manager of Sonata Software, said as part of prepared comments on Feb. 6.
The company did not disclose the amount of customer demands during the call but said the retail segment would take a hit.
“It’s been a soft period for us overall in retail. It’s had a quarter or two of growth, but we don’t expect to be on a solid growth trajectory in the next quarter or two either. I think retail will continue to be under pressure for us,” Dhir said.
Dhir added that the company has partially absorbed the impact in the third quarter (October-December 2025) and will absorb the remaining impact in the current quarter (January-March 2026). Sonata Software follows the April-March fiscal calendar.
Sonata is represented by Amanda R Steele of Delaware-based law firm Richards, Layton & Finger, PA.
