Venture capital-backed litigation financing startup, Legalpay has made its first successful exit in less than a year of providing interim finance to debt-laden Yashomati Hospitals last year.
“Legalpay exited the investment in about nine months of funding the hospital that was undergoing insolvency,” the company said in a statement.
Kundan Shahi, chief executive officer, Legalpay said, “We have successfully exited the investments in less than 9 months by giving over 26% pre-tax internal rate of return (IRRs) to our investors. The successful resolution of Yashomati Hospitals has established a landmark poster image that operational excellence can also be achieved during this period through third-party interim funding at the right moment and at reasonable interest rates. We are inclined to organize and make the entire insolvency and legal process efficient and effective.”
While the exact details remain undisclosed, the range of this transaction is likely between Rs 2-5 crore.
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).
Yashomati Hospitals was admitted for insolvency following a plea by Pegasus Assets Reconstruction in March 2021 for defaulting on its dues worth Rs 14.6 crore.
In October last year, Legalpay had announced interim finance to Yashomati Hospitals Pvt Ltd, its first deal under the Insolvency and Bankruptcy Code (IBC).
Kauvery Medical Care has now taken over the business of Yashomati Hospitals post the approval of the resolution plan by a Bengaluru bench of the National Company Law Tribunal (NCLT) on 30 May, 2022.
“Legalpay has been a great support to the entire insolvency process by making a quick-response to the request for interim finance whenever required. It understands the time-sensitive nature of all CIRPs and accordingly has carefully structured its product for interim finance to meet the need of the resolution professional for managing going concern entities. Services from Legalpay were very supportive and incredible,” said Ravinder Beleyur, the resolution professional for Yashomati Hospitals.
Legalpay, a New Delhi-based technology financing platform, targets mid-market companies including MSMEs undergoing insolvency with a requirement of interim finance ranging from Rs 10 lakh-5 crore.
“Such interim finance has super-senior right in realization and is paid out the first including interest and without haircuts, even before the other financial and operational creditors,” the company statement further said.
Last year 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.
The funding round was also participated by early-stage investment platform LetsVenture along with angel investors Ambarish Gupta, founder of New York-based private equity fund Basis Vectors and founder of Knowlarity.