BENGALURU: Sonata Software Ltd has filed an involuntary bankruptcy petition in a US court against a retail client over unpaid dues of about $10.65 million, an amount equivalent to roughly 6.6% of the company’s incremental revenue last fiscal.
The claim highlights the financial exposure from a client ramp-down 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 6 March, the Indian software services company filed the petition at a Delaware district bankruptcy court against OBSA Operating Company LLC, seeking $10.65 million in damages for non-payment of dues. A day later, Sonata notified Indian stock exchanges of the move.
“We would like to inform you that Sonata Software North America, Inc (“SSNA”), subsidiary of the Company has instituted proceedings against one of SSNA’s client for collection of accounts receivables and the damages,” said the company in a release dated 7 March.
Minnesota-based OBSA is primarily a retail and financial services company that operates the e-commerce brand, Fingerhut.
Sonata Software filed an involuntary petition against OBSA, which implies that Sonata has asked the courts to initiate bankruptcy proceedings against the company. The Delaware court will decide the validity of the petition.
If the court finds merit in Sonata’s case, a trustee will likely be appointed to oversee the sale and distribution of OBSA’s assets to creditors. Should the court dismiss the petition, Sonata may not receive the $10.64 million in damages and dues. For now, Sonata has factored both scenarios.
“The company has reviewed its exposure in relation to the above development, including receivables and existing contractual protection. However, we expect Q4 26 PAT to be still accretive compared to Q3 26 due to certain other one-time offsetting factors, and Revenues also is expected to be in line with the guidance provided during February 6, 2026 earning call,” read Sonata’s filing to the stock exchanges.
The company ended last year with $1.2 billion in revenue, up 15.5% on a yearly basis. Almost half of its revenue comes from selling software licenses.
Analyst view
At least one expert said the case could take time to resolve.
“I should note that the prospects of a timely resolution are uncertain and regardless of the strengths of their case the cash impact is likely to be significantly delayed,” said Peter Bendor-Samuel, founder of Everest Group. He added that the legal action could be seen as a nice win but a structural blip.
A similar issue was flagged by Sonata’s management during its post-earnings call with analysts last month. Mint could not independently ascertain if the retail client in reference was indeed OBSA.
“Very recently, there has been an unexpected ramp down in one of our large retail clients. We continued to work with the customer on the revised terms and conditions,” said Samir Dhir, chief executive of Sonata Software, as part of his prepared comments on 6 February.
The company did not clarify the amount of claims sought from the client during the call but said that the retail segment would take a hit.
“In the retail, in general, it has been soft for us. It had some one or two quarters of growth, but we do not expect to be in a solid growth trajectory in any time in the next one or two quarters as well. I think retail will continue to be under pressure for us,” said Dhir.
Dhir added that the company had partially absorbed the impact in Q3 (October-December 2025) and would absorb the remaining impact in the current quarter (January-March 2026). Sonata Software follows an April-March financial calendar.
Sonata is represented by Amanda R Steele from Delaware-based law firm, Richards, Layton & Finger, P.A.
