MUMBAI: The resolution plan of the bankrupt Orchid Pharma has been rejected by the lenders of the company that might drive the firm towards liquidation, according to recent media reports
“The resolution professional has conducted three rounds of bidding. However, lenders found bids in all the rounds unacceptable,” two senior persons told ET.
The 270- day deadline before which a resolution has to be in place ended on May 14.
Last year, Orchid Pharma was referred to the bankruptcy court by Lakshmi Vilas Bank in financial claims of Rs 3,500 crore. The company exports active pharmaceutical ingredients (APIs) of antibiotics and has two US Food and Drug Administration-approved manufacturing plants.
It is reported that Resolution Professional received four applications in the third round out of which three were legally compliant. The offers were rejected by the majority of lenders at an e-voting held on May 12 and no resolution plan was put in place by May 14 – the last day of submitting a plan to the bankruptcy court. It is yet not clear whether the RP will seek additional time from the bankruptcy court to revive the company with a resolution plan.
Informing the stock exchange Orchid Pharma has said, “The proposed resolution plan that was put for voting did not get requisite approval from the Committee of creditors (CoC), the CoC, through the RP has not submitted a resolution plan with Hon’ble National Company Law Tribunal.”
It is reported that the firm had received three bids from Union Quimico Farmacéutica, Ingen Capital, and Fidelity Trading Corporation in the second round of auctions held in April but the two bids were rejected as the bids of Ingen Capital and Fidelity Trading Corporation were found to be ineligible as they were not compliant with Section 29A of the insolvency code. The offer from Union Quimico Farmacéutica was too low even though it was eligible.
The bid of Union Quimico Farmacéutica was eligible but lenders found its offer of Rs 600 crore payable over a period of three to six years unacceptable.
As per the bankruptcy norms, Section 29A bars those companies that have defaulted on payments to lenders from bidding for other stressed assets.