Insolvency proceedings begin against Sequoia-funded Redkenko Health Tech
Axis Trustee Services Limited, acting on behalf of Blacksoil Capital Private Limited and Blacksoil India Credit Fund, has successfully initiated a Corporate Insolvency Resolution Process (CIRP) against Redkenko Health Tech Private Limited under Section 7 of the Insolvency and Bankruptcy Code, 2016. The case, filed before the National Company Law Tribunal (NCLT) Mumbai Bench, centers around an alleged financial default amounting to ₹5.65 crore by the health tech company.
Redkenko Health Tech Private Limited, better known as Kenko Health, had shut operations early this year following a financial and operational crisis. Redkenko Health was a health financing company that provides comprehensive plans covering OPD & IPD expenses. It had raised $12 million in February 2023 as a part of its Series A round led by Sequoia Capital India. The round also saw participation from existing investors Beenext, Orios, 9Unicorns and Waveform Ventures.
The petition cites Redkenko’s failure to meet its obligations under a Debenture Trust and Hypothecation Deed dated 14 September 2023. The agreement involved the issuance of 200 secured, redeemable, unrated, and unlisted non-convertible debentures, each valued at ₹5 lakh, amounting to a total debt of ₹10 crore. Blacksoil India Credit Fund and Blacksoil Capital Private Limited each contributed ₹5 crore towards these debentures.
Despite multiple notices and opportunities provided to Redkenko to address the defaults and comply with financial covenants, the company acknowledged its financial constraints and inability to fulfill its obligations in correspondence dated March 24, 2024. This admission led to Axis Trustee Services exercising its rights under the agreement and initiating CIRP proceedings.
The tribunal, upon reviewing the records and hearing arguments from Axis Trustee Services, noted that the financial debt was established under Section 5(8) of the Insolvency and Bankruptcy Code, 2016. The default amount exceeded the threshold of ₹1 crore as stipulated under Section 4 of the Code. The tribunal further observed that Redkenko failed to respond adequately despite repeated notices, leaving no dispute about the debt and default.
The NCLT has appointed Mr. Hemanshu Kapadia as the Interim Resolution Professional (IRP) to oversee the CIRP process. A moratorium under Section 14 of the Code has also been imposed, restricting any legal actions, asset transfers, or recoveries against Redkenko during the CIRP period.
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