NCLT clears Rs 577-cr plan for Arch Pharmalabs; lenders to recover about 5% of Rs 10,518-cr claims

The Mumbai bench of the National Company Law Tribunal (NCLT) has approved a Rs 577.24-crore resolution plan for bankrupt active pharmaceutical ingredient (API) maker Arch Pharmalabs Ltd. The plan was submitted by a consortium of entrepreneur Ashish Kumar and Hyderabad-based MetaX Life Sciences Ltd.

Financial creditors with admitted claims of Rs 10,518.06 crore will receive Rs 558 crore under the plan. That is a recovery of about 5.3%, based on calculations from figures in the order.

A bench of Ashish Kalia (judicial member) and Anil Raj Chellan (technical member) approved the plan in an order pronounced on October 15.

Lenders’ share

JM Financial Asset Reconstruction Company is by far the largest creditor. It holds admitted secured claims of Rs 7,863.72 crore and unsecured claims of Rs 2,205.68 crore, together about 96% of financial creditor claims. It will receive Rs 534.20 crore of the Rs 558 crore earmarked for lenders, according to the tentative distribution placed on record by resolution professional Anshul Gupta.

Other lenders’ payouts are much smaller:

• Bank of Baroda: Rs 8.58 crore against an admitted claim of Rs 161.79 crore
• Canbank Factors: Rs 6.05 crore against Rs 113.98 crore
• Export-Import Bank of India: Rs 4.94 crore against Rs 93.07 crore
• Axis Trustee Services: Rs 1.87 crore against Rs 35.28 crore
• Punjab National Bank, Union Bank of India, Omkara Assets Reconstruction and Capital Trade Links: under Rs 1 crore each

The lenders’ Rs 558 crore comes in two parts. Rs 450 crore is “FC plan consideration” routed through the company. The other Rs 108 crore is an “assignment consideration”, paid in exchange for creditors assigning their entire residual debt to MetaX. That assignment includes all security interest, personal and corporate guarantees, and rights to recoveries from avoidance applications.

Operational creditors will receive Rs 9.49 crore in total:

• Rs 2 crore for workmen and employees
• Rs 7.30 crore towards EPFO and ESIC dues
• Rs 14.39 lakh for other government dues
• Rs 4.81 lakh for all other operational creditors, whose admitted claims total Rs 124.26 crore

CIRP costs of Rs 9.75 crore will be paid at actuals. The entire plan is to be implemented within 75 days of approval.

Funding and merger

MetaX will fund the plan. The order says the consortium has a binding commitment of $75 million from AIO Growth Capital Fund SPC, made up of $25 million in equity and a $50 million senior secured term loan. MetaX also has agreements with Rishi Shah and BMBF Ventures LLP, which the order describes as a strategic investor in MetaX.

Lead member Ashish Kumar holds 90% of the consortium and MetaX 10%. California Software Company Ltd was originally a member but left the consortium before the revised plan was submitted.

The plan proposed merging MetaX into Arch Pharmalabs through a “single window” scheme of amalgamation. Under the scheme, the merged company would be renamed Aurexa Innovasynth Ltd or Aurexa Therapeutics Ltd. The tribunal declined to approve the merger as part of the plan. It said it has no jurisdiction over MetaX in this application, so the merger must follow the regular procedure under the Companies Act, 2013. The tribunal did allow the capital reduction, under which the erstwhile promoters’ existing share capital is extinguished, and the reconstitution of the board.

Avoidance recoveries go to the buyer

The resolution professional has a pending application under Section 66 of the Insolvency and Bankruptcy Code (IBC) against the company’s suspended directors, involving Rs 12.23 crore. The tribunal directed that pending applications under Sections 43 and 66 be pursued by the company at its own cost, with any recovery going to the successful resolution applicant.

The tribunal had listed the matter for clarification in June 2026 on how such recoveries would be distributed. The resolution professional’s affidavit relied on the Supreme Court’s ruling in Piramal Capital and Housing Finance vs 63 Moons Technologies. It also cited minutes showing the committee of creditors (CoC) had been told that these recoveries would be assigned to MetaX.

The same affidavit also addressed a June 16, 2026 order of the Insolvency and Bankruptcy Board of India’s disciplinary committee against the resolution professional. The tribunal’s order does not describe that order.

Reliefs

The tribunal refused the requested waivers from tax no-objection certificate requirements under the GST and income-tax laws, and the requested stamp duty exemption. It left the consortium free to approach the relevant authorities. Section 32A immunity covers the company, but not its directors or officers from before the approval date.

Background

Arch Pharmalabs was incorporated in 1993. It owns six plants and has 18 drug master files and 12 certificates of suitability.

The company was admitted into insolvency on May 15, 2024, on a Section 7 petition. It received only one resolution plan out of nine shortlisted prospective applicants. The CoC approved the plan with 98.03% of votes in October 2025. Support later rose to 100% after EXIM Bank, Canbank Factors and Union Bank of India were treated as assenting creditors.

The consortium has furnished a Rs 75-crore performance bank guarantee. The CoC will forfeit it if the plan is not implemented.

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