The Corporate Insolvency Resolution Process has been extended by 105 days, after considering the time lost from the EoI till the date for annulment of the approved resolution plan. The RP and the Committee of Creditors has been reinstated, to ensure the company is a going concern. “We will be going for a fresh EoI,” said S V Ramkumar, the RP. “We will also try to reach out to a few investors who earlier showed interest.”
Order and later
According to the NCLT order, with Ingen not infusing the required amount even after repeated orders, the RP had (last month) informed it there was no second resolution plan complying with the mandate but there was interest from investors to propose more, if one more chance was given, extending the CIRP period.
The RP received e-mails from Divi’s Laboratories, Gland Celsus Biochemicals and Fidelity Trading. And, he has said, oral enquiries from ART Capital (India), Everstone Group, Aion Capital, Piramal Capital and Finquest Group, all expressing interest in proposing new resolution plans.
The NCLT had earlier directed Ingen to pay a third of the amount due to the financial creditors, of Rs 334 crore, in a fixed period. This was not done. The resolution plan for Ingen was approved by the NCLT on September 17, 2018, under the Insolvency and Bankruptcy Code. It was to pay the amount in 30 days and settle with the consortium of 24 banks that had lent Rs 3,200 crore.
Issuing the order to nullify the earlier approval, the NCLT nench of B S V Prakash Kumar and S Vijayaraghavan said: “The reason for arriving at this conclusion is that it is a company doing wonderful business and providing life to 1,500 employee families, and contributing wealth to the nation…Beside this, according to the plan, it would offset the debt liability by paying not less than 30-40 per cent of its liability if restructuring was taking place.” Earlier, analysts had said one issue for investors was to augment the capacity faster at the US drug regulator’s approved facility the firm has in Tamil Nadu. Another was the valuation at which the bidders would get the facility, considering the size of debt.
It was felt by some that with the US regulator tightening its regulations, getting a pre-approved plant with capacity which could be put to use without much delay would be an attraction to companies
looking for backward integration.
The NCLT had earlier given the RP at Orchid Pharma more time after it was told representatives from US-based Ingen wanted to come to India and discuss the issues around the resolution plan. Ingen had alleged a difference between the assets they had been shown and the actual situation on ground. The allegation was denied by the RP. For Ingen, this would now be its second unsuccessful bid for Orchid. The private equity investor’s earlier bid, lower than the liquidation value of Orchid, was almost thrown out by the CoC. Ingen later offered to pay Rs 100 crore more than the liquidation value and this was subsequently approved by the panel, and then by the NCLT.
Orchid Chemicals & Pharmaceuticals, now Orchid Pharma, was established in 1992 as an export-oriented unit. It had a strong presence in cephalosporin antibiotic APIs, oral finished dosage formulations, generic injectables, carbapenem and penicillin formulations, and non-penicillin and non-cephalosporin medicines.
In 2008, there were reports of a takeover threat from Ranbaxy Group, through its Solrex Pharmaceuticals arm. The firm had sold its generic injectables business to Hospira Healthcare, a US-based company that was later acquired by Pfizer in 2009 for $400 million. In August 2012, the firm announced the sale of its carbapenem and penicillin API manufacturing facility in Aurangabad, with the related R&D unit in Chennai, and product pipeline to Hospira for $200 million (Rs 1,150 crore then).
It now, according to the website, has a generics oral formulations facility at Irungattukottai and an oral non-cephalosporin and oral cephalosporin formulations facility at another suburb, Alathur.
The NCLT had issued an order to appoint an RP to take charge of the management with effect from August 17, 2017. This was on a petition filed by an operational creditor, Lakshmi Vilas Bank. The company was among the 28 large corporate defaulters in the Reserve Bank’s second list in this regard for banks to take action, then referred to the NCLT.
With inputs from Aashish Aryan