Debt Tribunal clears decks for $218 mn Orchid-Hospira deal

The Debt Recovery Tribunal (DRT) in Chennai cleared the decks for Orchid Pharma to transfer its pencillin and penems API business along with some facilities to the US-based Hospira over a $200 million deal which was announced in August, 2012.

The DRT 1, Chennai, vacated a stay on the Business Transfer Agreement (BTA) between the companies, which was issued almost an year ago in favour of one of ING Vysya Bank, a lender to Orchid Pharma.

Sources close to the development confirmed the order and said the tribunal had pronounced the order on Tuesday.

During the hearing, ING Vysya Bank has argued Orchid had to pay around Rs 44 crore to the bank given to the latter for the working capital, which the company had used for long-term purpose. The Bank said that its accounts should be settled before implementing any agreement.

The bank also said it had opposed the corporate debt restructuring (CDR) package, as it would not receive the actual amount in its implementation.

However, Orchid Pharma argued the CDR proposal was duly accepted by the CDR Empowered Group, and according to which, its creditors, around 22 banks, would be getting a portion of the money they had lent while all of them were sacrificing a part of it, as it is required for the company's revival and payment of debt.

Orchid had argued 22 banks were involved in the CDR and the creditors were sacrificing Rs 364 crore, mostly the interest on credit.

The proposed BTA, which is now a part of the CDR procedure, has been into litigation as some of the debtors and shareholders of the company.

Also, Orchid's dispute with its largest shareholder group, billionaire investor Cyrus Poonawalla and his firms, including the biotech firm Serum Institute, was recently heard in the Chennai Bench of Company Law Board (CLB).

Orchid Pharma also received a favourable order from the CLB, which refused to issue a stay on implementation of its corporate debt restructuring (CDR) programme.

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Debt Tribunal clears decks for $218 mn Orchid-Hospira deal