Kinara Capital proposes temporary calm period to all its lenders

Kinara Capital defaults on payments and proposes a calm period via an intercreditor pact as it seeks to preserve cash and resume repayments from October 2025

After defaulting on payments to its lenders, Bengaluru-based Kinara Capital on Thursday said it has proposed to all its lenders to come together under an intercreditor agreement that would allow for a temporary “calm period”.

 

“The company’s board of directors took the decision to immediately preserve cash by pausing all lender payments for a couple of months till cash flows stabilise. This decision has led to payment defaults for now,” the company said in a statement on Thursday, adding that to facilitate a coordinated resolution, it has proposed an intercreditor agreement allowing for a temporary calm period.

 

“The company is committed to restarting repayments as early as October 2025 and remains focused on restoring stability through a collaborative and structured approach,” it further added.

 

 

Kinara Capital had continued to meet all its debt obligations in full and on time through July 2025 despite significant challenges over the past year.

 

It had then shared a comprehensive resolution plan—outlining a path for full or near-full recovery—with all its lending partners. This plan was reportedly met with a positive response, and it appeared that all lenders were willing to work with the company to implement it. 

 

Despite this, one lender took unilateral action that, according to the company, was not aligned with the collective understanding among lenders. This lender appropriated unencumbered fixed deposits and cash from Kinara Capital’s accounts—funds that were free and critical for operational continuity.

 

Prompted by this move, other lenders also demanded immediate payments and issued full loan recall notices.

 

Recently, rating agency ICRA downgraded the company’s ratings to ‘D’ following delays in debt servicing.

 

The agency observed: “Over the last few days, the liquidity profile of Kinara underwent a sharp deterioration triggered by some lenders setting off their loans against bank balances of Kinara and by appropriating the lien-marked fixed deposits. This was in the backdrop of the company being in breach of financial covenants for a sizable portion of its total debt over the past few quarters.”

 

“Consequent to the aforementioned appropriations by a few lenders, other lenders too issued loan recall notices by declaring events of default, given the continued covenant breaches,” ICRA added.

 

The agency also said that Kinara Capital’s liquidity position is expected to remain under stress in the near term, impacting its debt servicing capacity. As of June 2025, the company had total debt of Rs 1,853 crore from 46 lenders.