9Unicorns-backed tech-based litigation financing start-up LegalPay on Thursday said it is offering interim finance toYashomati Hospitals Pvt Ltd under the Insolvency and Bankruptcy Code (IBC).
The Bengaluru-and Ranchi-based hospital is undergoing insolvency after being dragged by its financial creditor Pegasus Assets Reconstruction Pvt. Ltd in October 2019 for default of Rs 14.61 crore. The insolvency court admitted the firm for the bankruptcy process in March.
The transaction was completed in a record time of less than three weeks, Legal Pay said in a statement. This is its first interim finance deal. It did not disclose the deal size.
Interim Finance is a short-term, secured lending for a period of 6-12 months granted to the debt-ridden companies undergoing corporate insolvency resolution process (CIRP).
In May, LegalPay, which invests in commercial litigations and provides interim finance, secured an undisclosed sum in a seed funding round led by 9Unicorns-- the venture fund set up by incubator and accelerator Venture Catalysts.
Early-stage investment platform LetsVenture also participated in the round along with angel investors Ambarish Gupta, founder of New York-based private equity fund Basis Vectors and founder of Knowlarity.
LegalPay targets mid-market companies including MSMEs undergoing insolvencies in which the requirement of interim finance ranges from Rs 10 lakh to Rs 5 crore.
The interim financing segment is dominated by private equity firms and groups having large asset reconstruction companies (ARCs) such as Edelweiss, KKR and Ravi Chachra-led Eight Capital, which facilitate high-ticket financing to beleaguered firms.
“We never expected or/and thought that the Term Sheet could be finalized by any Interim Finance provider in less than 12 days from the initial e-mail. This is the level of quick response needed for any Interim Finance for any CIRP. We complement LegalPay team to keep this speed for all the time-bound CIRPs which is an absolute need,” said Ravindra Beleyur, the court-appointed Resolution Professional for Yashomati Hospitals.
“Basing the reports and official data released by Insolvency and Bankruptcy Board of India (IBBI), the interim financing requirements for the companies undergoing insolvencies range between Rs 10 lakh to as hefty as Rs 800 crore, LegalPay said. A typical interim finance requirement varies between Rs 50 crore to Rs 200 crore.
Kundan Shahi, Founder and CEO of LegalPay said, “We feel pride in contributing for revival of a hospital, especially in mid of a pandemic. We follow a very stringent due diligence and risk assessment process before arriving at a decision. The number of admitted CIRPs is set to grow specifically after the introduction of pre-packed insolvency process, which is much quicker at around 120 days. We see insolvency market as a very strong foot-hold for us and look forward to provide best possible solutions to organise the market and make it efficient.”