Chennai firm that made headlines with $4 billion funding faces insolvency

Ram Charan Company Pvt Ltd, a Chennai-based firm that made headlines a few months ago when it announced a $4.14 billion investment from US-based private equity fund TFCC International, is facing insolvency proceedings. The company, a chemicals trader that moved into renewable energy, failed to repay a loan of Rs 3.5 crore to Classic Exports. 

In November 2021, New York-based impact fund TFCC International had entered into an agreement with Ram Charan to acquire a 46 per cent stake for $4.14 billion, valuing the firm at around $9 billion. The deal was touted as the biggest in the domestic chemicals space, and one of the biggest private equity deals across the industry in the country till date.

NCLT admits insolvency application

Recently, the National Company Law Tribunal’s (NCLT) Division Bench One, comprising R Sucharitha, Member (Judicial) and Sameer Kakar, Member (Technical), admitted the insolvency application filed by Classic Exports under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, said an Indian Express report.

According to the report, the tribunal has nominated S Vasudevan as the Interim Resolution Professional (IRP). Classic Exports said Ram Charan failed to repay Rs 2.55 crore, which it had taken across six tranches from April 2018 to February 2019. There is also outstanding interest of Rs 95.66 lakh at the rate of 2% per month.

Ram Charan argued that it defaulted only from March 2020, due to COVID  impact on its business, not from November 2019, as was alleged. The NCLT, however, observed that the company had not paid the interest from March 2020 and there was a default much after the Section 10A period. Section 10A gives some time relief to debtors. No interest has been paid on the principal amount as well.