One of the companies in the race to acquire Orchid Pharma, Accord Life Spec had alleged that resolution plan by Dhanuka was neither viable nor feasible and was initially dissented by the members of the CoC, but subsequently, they voted in favour.
In yet another twist in the tale of finding a suitor for the beleaguered Orchid Pharma, the Supreme Court has an ordered interim stay on the National Company Law Appellate Tribunal’s (NCLAT’s) ruling setting aside the NCLT’s approval of a resolution plan by Gurgaon-based Dhanuka Laboratories for the debt-ridden company.
The NCLAT in its November 13 order had set aside the Chennai NCLT order that approved the resolution plan by Dhanuka Laboratories, on the ground that the amount offered in favour of stakeholders including the financial creditors and the operational creditors was much less than the liquidation value. This was Orchid’s second resolution plan being quashed, the previous resolution plan by US-based Ingen Capital was annulled by the NCLT after the firm failed to remit the upfront payment as per the norms.
The Supreme Court’s order came in response to an appeal by State Bank of India, a key member in the CoC, seeking setting aside of the NCLAT order on the ground that the appellate tribunal has erred while overriding the commercial wisdom of the CoC. In its December 6 order, Supreme Court directed issuance of notice returnable in four weeks. “There shall be stay of further proceedings in the meantime,” said the bench of Justices Rohinton Fali Nariman and S Ravindra Bhat. The NCLAT, acting on an appeal filed by one of the resolution applicants, Accord Life Spec, had set aside the resolution plan while remanding the matter to the adjudicating authority (Chennai NCLT) for a fresh decision in accordance with law.
One of the companies in the race to acquire Orchid Pharma, Accord Life Spec had alleged that resolution plan by Dhanuka was neither viable nor feasible and was initially dissented by the members of the CoC, but subsequently, they voted in favour. To this,the NCLAT bench said that as the plan was approved with voting share of 67%, it was not inclined to accept the submission.
The NCLT had approved the resolution plan by Dhanuka Laboratories on June 25, rejecting a plea against it by Accord Life Spec, which cited inadequate mandatory vote share of the committee of creditors (CoC). Accord Life Spec moved the NCLAT against this order.
According to the Dhanuka plan, the creditors will get around Rs 1,116 crore including Rs 570 crore quoted by Dhanuka Lab. Orchid’s liquidation value was around Rs 1,300 crore.
The earlier resolution plan by Ingen, which was approved by the NCLT in the first attempt and later annulled by the tribunal, was for a total of Rs 1,490 crore. Orchid Pharma owes banks more than Rs 3,000 crore.
Source: Financial Express, December 11, 2019