The National Company Law Tribunal (NCLT) on Monday approved Gurgaon-based Dhanuka Laboratories’ Rs 1,116 crore resolution plan to take over the debt ridden Orchid PharmaNSE 4.17 % in what could be termed as yet another case resolved under the Insolvency and Bankruptcy Code (IBC).
The Chennai bench of NCLT held the view that a majority of the financial creditors had approved the bid by Dhanuka overruling an objection filed by Accord Life Spec.
As per the terms set, the lenders will get about Rs 1,116 crore including Rs 570 crore quoted by Dhanuka Lab. A consortium of 24 banks has lent a total of over Rs 3,200 crore to the drug maker and the lenders will be taking a haircut of around 65%.
ET reported on June 5 that Dhanuka leads the race to buy Orchid Pharma.
Earlier this month, Accord Life Spec, another resolution applicant, asked the court to consider its bid after Punjab National BankNSE -0.13 % (PNB) subsidiary, PNB International Ltd (PIL), withdrew its consent to the resolution plan, leading to votes in favour of the plan falling below the 66% required.
Without PIL’s consent, the plan received 65.60% of the vote which the court considered as 66% required clearing the plan.
Besides Dhanuka, two other companies — Accord Life Spec and Covalent Laboratories — had bid for Chennai-based Orchid Pharma in a second round of bidding.
A second round of bids was necessitated after the previous winner, Ingen Capital, could not fulfill its financial obligation, including Rs 334 crore in upfront cash. The Chennai bench of the NCLT annulled Ingen Capital’s resolution plan in February and allowed 105 days to the resolution professional and the committee of creditors (CoC) to seek fresh expressions of interest.
Orchid’s bankruptcy reflects the state of India’s API manufacturers, experts said. The company had to sell assets to rein in debt. In 2012, it sold its penicillin business to US drugmaker Hospira for $200 million.
Orchid Pharma is among the 28 large corporate defaulters in the Reserve Bank of India’s second list of debt-laden companies that were referred to the NCLT. It was admitted in the Chennai bench of the NCLT in August 2017.
