The NCLAT has rejected the bid of Dhanuka Laboratories for the debt ridden Orchid Pharma, and vacated the order passed by the Chennai-bench of NCLT, which had earlier approved its resolution plan.
The appellate tribunal observed that the approved resolution value, which stood at Rs 1,146.04 crore, proposed by Dhanuka Laboratories was lower than the liquidation value of Rs 1,309 crore of the company.
"The upfront payment alleged to be less than the 'Liquidation Value' of Rs 1,309 crore," said the NCLAT-bench headed by Chairman Justice S J Mukhopadhaya.
Earlier, the Chennai-bench of National Company Law Tribunal (NCLT) had approved the Resolution Plan submitted by Dhanuka Laboratories on its order dated 25 and 27 June, 2019.
"Admittedly, the amount offered in favour of stakeholders including the 'Financial Creditors' and the 'Operational Creditors' is being much less than the 'Liquidation Value', such 'Plan' cannot be accepted.
"For the reasons aforesaid, we set-aside the impugned order dated 25/27th June, 2019 ordering approval the 'Resolution Plan', but do not interfere with the impugned order dated 25th/27th June 2019 by which the application filed by M/s Dhanuka Laboratories Ltd, a 'Resolution Applicant' was rejected," said the National Company Law Appellate (NCLAT).
The appellate tribunal said infusions of fund for maximization of the assets of the Corporate Debtor cannot be counted for the purpose of the amount. Dhanuka Laboratories resolution plan also had a provision of equity infusion of Rs 570 crores as working capital.
"Infusions of fund for maximization of the assets of the 'Corporate Debtor' cannot be counted for the purpose of the amount, which is being kept for distribution amongst the stakeholders, including the 'Financial Creditors' and 'Operational Creditors', if it is less than the 'Liquidation Value', such 'Plan' cannot be upheld, being against the object of the I&B Code and Section 30(2) of the said Code," it said.
The NCLAT order came over a petition filed by Accord Life Spec, which had challenged the order of NCLT approving Dhanuka Laboratories' bid.
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