Orchid Pharma Faces Liquidation as Lenders Reject Resolution Plan

The lenders to Orchid Pharma have rejected the resolution plan of the bankrupt company, a decision that could push the troubled drug-maker toward liquidation. According to a report in the Economic Times, the Resolution Professional (RP) conducted three rounds of bidding but the lenders found bids in all the rounds unacceptable.

Orchid Pharma was referred to the bankruptcy court by Lakshmi Vilas Bank after it failed to pay about Rs. 3,500-crore to lenders. It is also in the second list of 28 companies that the Reserve Bank of India had mandated banks to refer to the bankruptcy court by the end of December 2017 if lenders were unable restructure the respective loans by mid-December.

In the third round, the RP received four applications, of which three were legally compliant. At an e-voting held on May 12, the majority of the lenders rejected the offers they received and no resolution plan was put in place by May 14 – the last day of submitting a plan to the bankruptcy court. It was not clear whether the RP will seek additional time from the bankruptcy court to revive the company with a resolution plan. Union Quimico Farmacéutica, ngen Capital and Fidelity Trading Corporation were the three bidders in the second round of auctions held in April but their bids were rejected since two of them – 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.