Orchid Pharma Likely To Challenge Insolvency Proceedings At NCLAT
NCLT admits Orchid Pharma’s insolvency case, appoints interim resolution professional.
Orchid Pharma Ltd. may appeal against the insolvency proceedings initiated against it after a petition by one of its lenders, Lakshmi Vilas Bank, was accepted by the National Company Law Tribunal.
The company is exploring suitable legal recourse, including an appeal before the National Company Law Appellate Tribunal, it said in a stock exchange filing.
The Chennai bench of NCLT on Tuesday appointed CS Rajasekaran as the interim resolution professional, who will now take charge of the management of the company as the board of Orchid Pharma stands suspended as per the provisions of the Insolvency and Bankruptcy Code.
Orchid had taken a Rs 50 crore loan from Lakshmi Vilas Bank, backed by real-estate assets, which it failed to repay, according to the court order. When the bank started selling the property to recover the loan amount, Orchid renegotiated a monthly lease agreement on some of the property. However, it hasn’t made any payments towards the lease since January 2016, the order stated.
The total lease rent to be paid by Orchid till May 2017 stands at Rs 20.6 crore.
Orchid had argued in court that it is already under corporate debt restructuring and insolvency proceedings now would only duplicate the process. It added that the lease was not renewed since May 2014 and hence the “claim of the petitioner is disputed”.
However, the court noted that payments on the lease were made for two years till December 2015 and Orchid cannot raise that argument now.