2 April 2020: Lenders to Orchid Pharma have received close to Rs 1,100 crore from Gurgaon-based Dhanuka Laboratories on the last working day of the financial year 2020, sources close to development told FE. The monitoring committee attached to the insolvency process of Orchid Pharma implemented the resolution plan on March 31.
This implies around 32% recovery for banks against total exposure of Rs 3,299 crore to Orchid Pharma. The development on late evening of March 31 also marks significance as banks will be able to show recovery on their books in the March quarter.
According to sources, lead creditor State Bank of India (SBI) has in all likelyhood received Rs 130 crore, Bank of India Rs 101 crore, Allahabad Bank Rs 81 crore, Andhra Bank Rs 74 crore, Punjab National Bank (PNB) Rs 70 crore and Union Bank of India Rs 62 crore from the resolution of Orchid Pharma.
The lenders will also receive 4,08,164 equity shares of Orchid Pharma at Rs 10 each. There will also be issue of 0% non-convertible, non-marketable, cumulative redeemable debentures of value of Rs 3,650 crore to a special purpose vehicle created by Dhanuka Laboratories, as a part of the resolution plan.
The National Company Law Tribunal (NCLT), Chennai, had approved Dhanuka’s resolution plan on June 25, 2019, for Orchid Pharma after earlier approved bidder — Ingen Capital — refused to pay money for the company. However, trouble started for the company when the National Company Law Appellate Tribunal (NCLAT) in its November 13, 2019, judgement had set aside the Chennai NCLT’s order that approved the resolution plan by Dhanuka, on the ground that the amount offered in favour of stakeholders including the financial creditors and the operational creditors, was less than the liquidation value.
Lead creditor SBI had later filed the appeal before the Supreme Court seeking setting aside the NCLAT order, alleging that the appellate tribunal erred in overriding the commercial wisdom of the CoC.
Finally, a Supreme Court bench of Justices Rohinton Fali Nariman and S Ravindra Bhat, on February 28, 2020, set aside the judgement of the NCLAT, in view of its recent judgement where it had categorically held that no provision in the Insolvency and Bankruptcy Code (IBC) or regulations had been brought to the court’s notice, under which the bid of any resolution applicant has to match the liquidation value arrived at in the manner provided in the relevant regulations.