27 July 2019: The National Company Law Appellate Tribunal (NCLAT) has stayed the sale of Orchid Pharma to Dhanuka Laboratories, in the eleventh hour, as the scheme for acquisition was to become operational from Saturday.
In response to a petition filed by Accord Life Spec Private Ltd, a company promoted by DMK MP Jagatrakshagan’s family members, the NCLAT stayed the bids. It also ordered that SBI be impleaded in the case as one of the respondents. Accord along with Covalent were the two bidders who were in fray, but lost out to Dhanuka.
The Chennai bench of NCLT approved the resolution plan of Dhanuka Laboratories at Rs 1,116 crore, including the Rs 570 crore quoted by the pharma company, to take over Orchid Pharma under the Insolvency and Bankruptcy Code (IBC). Under the terms ordered, Dhanuka should have injected the bid amount into Orchid on Friday, but it is learnt that the company did not receive any fund inflows from Dhanuka.
The Resolution Professional (RP) or Orchid had said the Committee of Creditors (CoC) had approved the resolution plan with 67.07% in e-voting taken place between June 7- June 11, although one of the financial creditors, Punjab National Bank International Limited, reversed its vote to dissent via an e-mail.
The resolution plan of Dhanuka Laboratories was lower than Orchid Pharma’s liquidation value of Rs 1,309 crore. However, Dhanuka had proposed to pay Rs 570 crore to the creditors, to bring in a cash balance of Rs 322 crore and provide Rs 186 crore to the corporate debtor, besides infusing equity worth Rs 40 crore into the company. The bench noted that it was more concerned about the 1,407 employees of Orchid Pharma, who were eking their livelihood by working in this company. The tribunal has posted the case for hearing on August 28. This is the second bid for Orchid that has faced regulatory bump. Ingen capital submitted a bid for Rs 1,000 crore, but failed to bring in the funds which resulted in the collapse of the transaction. The RP was ordered by the NCLAT to call for fresh bids, which resulted in Dhanuka getting the nod.