2 March 2019: The Chennai bench of National Company Law Tribunal (NCLT) has annulled the approved resolution plan by the US-based lngen Capital Group for Orchid Pharma and ordered fresh corporate insolvency resolution process (CIRP) for the beleaguered pharma company.
The NCLT order came after Ingen failed to bring in the promised money, even after the stipulated time and despite the bench giving it an option to pay one-third of the amount to take the proceedings further.
The NCLT bench of SV Prakash Kumar, judicial member, and S Vijayaraghavan, member-technical, came down heavily on Ingen for failing to comply with the procedures after a resolution plan of the company was approved by the bench.
The tribunal observed that since there is no second resolution plan available, it ordered to undergo CIRP from the stage of invitation of expression of interest and complete it in another 105 days.
The resolution professional, who sought going in for fresh bid process yet again, informed the NCLT that he had received e-mails from Divis’ Laboratories, Gland Celsus Biochemicals and Fidelity Trading Corporation.
Apart from this, he submitted that he has received oral inquiries from ART Capital, Everstone Group, Aion Capital, Piramal Capital and Finquest group, expressing interest in proposing resolution plans in respect of Orchid Pharma.
The resolution plan by Ingen Capital Group was approved by the NCLT on September 17, 2018, after the committee of creditors (CoC) cleared it. As per the resolution plan, which was for `1,490 crore, Ingen was to infuse `1,060 crore within five days of the plan approval.
When the company failed to pay the amount, the resolution professional moved the NCLT and it on October 10, 2018, ordered Ingen to deposit one-third of the amount – `334 crore – into the financial creditors’ escrow account. Ingent appealed the NCLAT against this order, but the appellate tribunal remanded the case back to NCLT to pass appropriate orders.
When the RP as well as CoC realised that Ingen has no intention to implement the plan and it was difficult to manage the going concern (Orchid) running with 1,500 employees, the RP sought going in for fresh CIRP. Prior to this, the CoC had in April 2018 rejected three bids received when the lenders’ panel was not satisfied with the ‘quality of offering’, and subsequently authorised the RP to initiate fresh bidding process. Orchid has a total debt of around `3,200 crore from a slew of banks.
Admitting a petition filed by one of the operational creditors, Lakshmi Vilas Bank, the NCLT had in August 2017 issued an order to begin the process of insolvency of Orchid Pharma, once a key player in injectables and active pharmaceutical ingredients.
Orchid Pharma had been facing severe financial crisis with lenders and investors approaching legal fora for a remedy and was brought under the corporate debt restructuring scheme, initiated during 2013, for the revival of its operations.
The CoC has considered the resolution plan of Ingen Capital Group in its meeting on June 4, 2018 and the plan received an affirmative vote of 78.64% of the CoC by value in its favour.