6 June 2019: The new suitor for the beleaguered Orchid Pharma will be known by Friday, when the committee of creditors (CoC) meets to vote to choose one among the three pharmaceutical companies that are in the race in the second round of bidding, related to the corporate insolvency resolution process (CIRP) of the debt-ridden company.
The three companies in the list are Gurgaon-based Dhanuka Laboratories, Chennai-based Accord Life Spec and Hyderabad-based Covalent Laboratories, sources in the know told FE. Dhanuka Lab is a manufacturer and exporter of oral cephalosporin active pharmaceutical ingredients (APIs), while Covalent also specialises in manufacturing cephalosporins.
Accord Life Spec, part of Accord Group, has diversified interests in medical education, technical universities, hospitals, breweries and hotels. This was Orchid’s second attempt to find a resolution plan under the CIRP, as the previous resolution plan by US-based Ingen Capital was annulled by the National Company Law Tribunal (NCLT) after the firm failed to remit the upfront payment as per the norms.
Sources said that despite the renewed interest and the participation of the three companies in the final round, the highest bid this time would see a larger haircut compared to Rs 1,490-crore offer submitted by the previous bidder, Ingen Capital. Orchid owes Rs 3,200 crore to a consortium of 24 banks.
The NCLT had declared the approved resolution plan by Ingen invalid as the company had 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 resolution plan by Ingen Capital Group was approved by the NCLT on September 17, 2018, after the CoC had cleared it. As per the resolution plan, which was for Rs 1,490 crore, Ingen was to infuse Rs 1,060 crore within five days of the plan approval. When the company failed to pay the amount, the RP moved the NCLT, and on October 10, 2018, it ordered Ingen to deposit the upfront amount into the financial creditors’ escrow account.
With Ingen failing to pay up the upfront money, NCLT had directed it to pay one third of the payment due to the financial creditors of the pharmaceutical company, which is around Rs 334 crore, in a fixed time-frame. However, with no payment coming in, NCLT scrapped the approved resolution plan by Ingen and ordered fresh round of bidding.