LegalPay, India’s first and only tech-driven alternative-investments platform specializing in legal financing investments including, has partnered with NBFC Jumbo Finance for the secured interim financing. The company plans to have more such partnerships this year as there is an increasing number of companies going under insolvency.
Under IBC 2016, Interim Financing is a short-term super-secure loan that allows an insolvent company to remain operational while it is undergoing a Corporate Insolvency Resolution Process (CIRP). LegalPay targets mid-market companies including MSMEs undergoing insolvencies that have a requirement of INR 10 Lakhs - INR 5 Crores
LegalPay’s CEO and Founder Kundan Shahi said, “We are aggressively capturing the insolvency market and partnering with renowned NBFCs to deploy funds in insolvency market and enjoy lucrative interest rates for short-term super-secured lending. This will provide investors with more opportunities to invest in distressed debt assets over the foreseeable shorter time horizon.”
India’s stressed asset market is estimated to be worth around $150 billion and is likely to see an uptick in deal activity in FY 2022.
According to the recent RBI financial stability report, the gross non-NPA ratio is likely to increase from 7.48% in March 2021 to 9.80 % - 11.22 % in March 2022.
"Investing in distressed debt assets is an interesting space for us as investors and we look forward to our partnership with LegalPay to explore opportunities in the insolvency market /space," said Smriti Ranka, Managing Director of Jumbo Finance.
Within insolvency, LegalPay competes with restructuring giants such as Edelweiss, KKR, Eight Capital, that generally focuses on high-ticket transactions.