25 June 2019: The Chennai bench of the National Company Law Tribunal (NCLT) has approved Dhanuka Laboratories’, resolution plan for the debt-ridden Orchid Pharma. The Tribunal has rejected a move against the plan filed by Accord Life Spec, another resolution applicant. Creditors will get about Rs 1,116 crore including Rs 570 crore quoted by Dhanuka Lab, along with cash. Orchid’s liquidation value was about Rs 1,300 crore.
The earlier resolution plan by Ingen, which was approved by the NCLT in the first attempt, was for a total of Rs 1,490 crore.
The selection of a prospective plan by the CoC ran into trouble with one of the CoC members – Punjab National Bank (International) – which sent an email seeking to change its e-voting to dissenting just ahead of the voting deadline. The initial 67.07 per cent votes favouring Dhanuka’s resolution plan (as against the regulatory requirement of 66 per cent) would have been went down to 65.53 per cent once the change was considered.
The NCLT bench of BSV Prakash Kumar, member (judicial), and S Vijayaraghavan, member (technical), today observed that while Punjab National Bank (International) Ltd sent an email it did not place any grievance before NCLT. Simply sending an email against voting needn’t be taken into account, it added.
While the liquidation value was about Rs 1,300 crore, Dhanuka’s quote is worth Rs 570 crore, of which Rs 370 crore would be made upfront. The Resolution Professional informed the Bench that with other considerations, including Rs 321 crore of cash, the total amount creditors will get following the process will be about Rs 1,116 crore. The Bench observed that the valuation is almost equivalent to the liquidation value.
Around 1,400 employees are earning their livelihood from the company and if there is no solution, they will be immediately impacted. Besides, if the company is revived and generates revenue, it will also be beneficial to the State, observed the Bench.
Another application filed by Chennai-based Accord Life Spec, a pharmaceutical company, against the RP considering Dhanuka’s plan, raised concerns that there has been procedural irregularity as the RP did not factor in the change in voting by Punjab National Bank (International). Its contention was dismissed by the Bench, which observed that Accord is not aggrieved by the exercise taken up by the CoC in approving the resolution plan placed before it.
The RP argued that while Dhanuka has placed material related to the source of fund and its expertise in the business of Orchid Pharma, Accord could not show any source of fund for the proposed plan.
Accord Life Spec, which is part of the Rs 1,700 crore Accord Group, approached the NCLT against the RP’s decision to submit Dhanuka’s resolution plan, and said it is ready to revise its quote to Rs 615 crore if there is a favourable order from the NCLT.
This is the second attempt to find a successful resolution plan for the drug maker, as NCLT annulled Ingen Capital’s earlier plan after approving it for implementation, as the investor allegedly failed to remit upfront payment as per norms. Under Ingen’s resolution plan, which got NCLT’s nod on September 17, 2018, the company was expected to deposit Rs 1,000 crore upfront to the financial creditors. Ingen, however, sought more information, which was disallowed by the resolution professional.