NCLT Approves ₹577 Crore Arch Pharmalabs Plan; Lenders Get 5.3% of ₹10,518 Crore Claims

The National Company Law Tribunal, Mumbai Bench-II, has approved the resolution plan for Arch Pharmalabs Limited submitted by a consortium of Ashish Kumar and MetaX Life Sciences Limited, in an order pronounced on 15 October 2026 in IA (IBC)(Plan) No. 127/MB/2025 in CP (IB) No. 686/MB/2023 and uploaded on the IBBI portal on 18 October 2026. The bench of Ashish Kalia (Member Judicial) and Anil Raj Chellan (Member Technical) cleared a plan with a total value of ₹577,24,30,812 against admitted claims of ₹10,668.59 crore, which works out to a recovery of about 5.4 paise in the rupee for the creditor body as a whole.

Financial creditors, whose admitted claims stand at ₹10,518.06 crore, receive ₹558 crore. That is 5.3 per cent (558 divided by 10,518.06), and the plan applies the same ratio to secured and unsecured lenders alike. The two large JM Financial Asset Reconstruction Company claims, one secured and one unsecured, together make up ₹10,069.40 crore or 95.7 per cent of the admitted financial debt, which explains the 95.85 per cent and 98.03 per cent voting majorities recorded at different stages of the process.

Arch Pharmalabs, incorporated on 2 April 1993 with its registered office at Chandivali, Andheri (East), Mumbai, manufactures active pharmaceutical ingredients. The order records six plants, properties owned or leased at Nerul and Solapur in Maharashtra and Vadodara in Gujarat, USFDA, EU GMP and PMDA (Japan) certifications, 18 drug master files and 12 certificates of suitability. Three registered valuers put the average fair value at ₹536.34 crore and the average liquidation value at ₹345.45 crore, so the ₹558 crore going to lenders is roughly 1.6 times what a liquidation was expected to fetch for the whole estate.

Who gets what out of ₹577.24 crore

The plan value splits into a discharge amount of ₹567,49,13,582 and CIRP costs of ₹9,75,17,230, the latter payable at actuals. The table below sets the payouts against the claims admitted as on 12 December 2025, with the percentages computed from the order's figures.

Of the ₹7,44,32,620 earmarked for statutory dues, ₹7,29,93,352 goes to EPFO and ESIC and ₹14,39,268 to other government creditors. Government claims of ₹130.37 crore had been lodged but only ₹23.39 crore was admitted, and other operational creditors, with ₹124.26 crore admitted, share ₹4,80,962 between 44 claimants. Workmen claims, claims of financial creditors in a class and related-party claims are recorded as nil. Equity holders get nothing from the plan; instead MetaX subscribes ₹50 crore for 5,00,00,000 fresh shares of ₹10 each, due within 75 days of the approval date, and the tribunal has permitted the capital reduction and board reconstitution the plan provides for.

Pro rata 5.3 per cent for secured and unsecured lenders alike

The lender-wise distribution in paragraph 6.8 of the order, drawn from the resolution professional's additional affidavit of 20 January 2026, shows the ₹558 crore spread strictly in proportion to admitted claims rather than by security. Each lender's share is 5.3 per cent of what it was admitted for, whether it held charges over the plants or was wholly unsecured.

Dissenting financial creditors, if any, are to be paid out of the same financial-creditor consideration an amount not less than what they would receive under section 53(1) of the Code, but they take no part in the assignment arrangement described below. The order records that two unsecured lenders holding 1.97 per cent of the voting share did not vote at the e-voting concluded on 24 October 2025; EXIM Bank, Canbank Factors and Union Bank of India later assented, and Form H dated 20 January 2026 records 100 per cent approval.

₹450 crore in cash, ₹108 crore for assignment of debt and guarantees to MetaX

The ₹558 crore for lenders comes from two streams. The consortium will infuse ₹450 crore into the corporate debtor within 75 days of the plan approval date to pay the financial creditors. A further ₹108 crore is paid by MetaX into an escrow account as assignment consideration, and on receipt the assenting secured and unsecured lenders assign their debt to MetaX. Paragraph 6.5(b) of the order says the assignment carries the security interest, including encumbrances over the plants and the personal and corporate guarantees, together with the rights to recoveries from avoidance applications, and that such claims shall ipso facto stand assigned to MetaX. Practitioners advising promoters or group companies that guaranteed Arch Pharmalabs' borrowings should read this clause closely: the guarantees do not fall away with the plan, they change hands.

On the source of funds, the order records the applicant's statement that MetaX holds a binding commitment of USD 75 million from AIO Growth Capital Fund SPC, split as USD 25 million of equity and USD 50 million of senior secured term loan, along with commitments from Rishi Shah and BMBF Ventures LLP, described as a strategic investor in MetaX. The order records these as the applicant's statements and rests on the committee of creditors' assessment of feasibility and viability, backed by the ₹75 crore performance bank guarantee furnished on 27 October 2025, which stands forfeited if the consortium fails to implement the plan or withdraws. All payments to CIRP costs, operational creditors and financial creditors fall due within the same 75-day window.

The consortium itself changed shape during the process. The original bid had Ashish Kumar at 80 per cent with MetaX and California Software Company Ltd at 10 per cent each; California opted out, the committee approved the revised composition on 29 September 2025 with a 95.85 per cent majority, and the plan now rests on Ashish Kumar as lead member holding 90 per cent and MetaX holding 10 per cent. MetaX is described in the order as a Hyderabad-based API manufacturer incorporated on 17 October 2000. The plan also contemplates a merger of MetaX with the corporate debtor, which the tribunal declined to deal with: it holds that it does not exercise jurisdiction over the transferor company in this application and that any merger must follow the Companies Act route separately.

Avoidance recoveries redirected to the resolution applicant

The transaction audit report reached the resolution professional on 28 October 2025 and went to the committee on 4 November 2025. An application under section 66 of the Code, IA 5805/2025 filed on 3 December 2025, seeks ₹12.23 crore from the suspended directors and remains pending. The plan treated recoveries in two parts, with amounts recovered before the effective date going to the financial creditors and recoveries after it assigned to MetaX, and the minutes of the tenth committee meeting record that assignment with reference to the Supreme Court's decision in Piramal Capital v. 63 Moons.

The tribunal's operative direction IX departs from that split. It directs that the pending applications under sections 43 and 66 be pursued by the corporate debtor at its own cost and that any recovery be distributed to the successful resolution applicant. For insolvency professionals, the practical point is that an approved plan's clause on avoidance proceeds is not self-executing once the adjudicating authority writes its own direction; the monitoring committee will have to follow the order rather than clause 8 of the plan. The resolution professional sits on the Implementation and Monitoring Committee and must file quarterly progress reports.

No GST, income-tax or stamp-duty waivers; Section 32A protection granted

The consortium had sought reliefs and concessions under clause 4.9 of the plan while stating that the plan is not contingent on them. The tribunal granted none of the fiscal waivers. Relief sought from proceedings under section 81 of the CGST Act and from various provisions of the Income-tax Act was refused on the ground that such matters fall within the jurisdiction of the authorities empowered under those statutes, and the applicant was left to approach them. Stamp duty and registration-fee exemptions were likewise not granted. On licences and approvals, the order says waivers for the period after the approval date remain subject to the concerned authorities, gives the corporate debtor one year to obtain the required approvals, recommends due consideration of its revival, and adds that expired permits may be renewed and that continuance cannot be refused merely because dues under the Code have been extinguished.

What the tribunal did grant is the protection under section 32A: the corporate debtor is shielded from prosecution for offences committed before the commencement of CIRP, but the shield does not extend to non-compliance after approval and does not cover directors or officers associated with the company before the plan approval date. Claims not dealt with in the plan stand extinguished on the authority of Ghanshyam Mishra, and no proceedings may be initiated or continued on pre-approval claims outside the plan. The moratorium under section 14 ceased on the date of the order.

On the law, the bench followed the settled line. Citing K. Sashidhar, it confined itself to checking the requirements of section 30(2) and held that the commercial wisdom of the committee must be adhered to unless those requirements are not met; citing Essar Steel, it noted it cannot modify an approved plan. It found the plan compliant with section 30(2), Regulations 37, 38, 38(1A) and 39(4) of the CIRP Regulations, and not in contravention of section 29A. Recent approvals by the Mumbai benches show how wide the range of approved outcomes is: the ₹1,611 crore Shree Naman plan for Gstaad Hotels paid operational creditors in full, while the ARK Industries plan delivered 0.51 per cent on ₹215.39 crore of admitted claims.

From rejected petitions in 2023 to approval on 15 October 2026

The IBBI corporate-process page for Arch Pharmalabs lists earlier petitions dismissed or rejected on 8 February 2023, 31 March 2023 and 21 November 2023 before the admission order of 15 May 2024 under section 7, with Sanjay Garg appointed interim resolution professional and the public announcement made on 17 May 2024. The cause title names Bank of Baroda as the financial creditor. A May 2024 report on M&A Critique records that JM Financial ARC, claiming 97 per cent of the company's debt and citing a December 2017 restructuring that had cut dues to ₹1,400 crore, sought to intervene against admission and was turned down.

The committee replaced the interim resolution professional with Anshul Gupta at its first meeting on 10 February 2025, confirmed by the tribunal on 27 February 2025, and the tribunal excluded 237 days from the timeline on 10 March 2025 before granting 90-day and 60-day extensions on 12 August and 16 October 2025. Form G went out on 16 March 2025 with an addendum on 27 March 2025 and a last date of 8 April 2025; nine prospective resolution applicants made the final list on 3 May 2025; the request for resolution plans was issued on 8 May 2025 with the submission date extended to 21 June 2025. Only one plan came in. It was opened at the fifth committee meeting on 26 June 2025, revised on 30 September 2025 after the consortium change, put to e-voting that closed on 24 October 2025, and followed by a letter of intent on 26 October 2025. The approval application was listed for clarifications on 19 June 2026, with the resolution professional filing an additional affidavit on 25 June 2026, and the order came on 15 October 2026.

The next dates to watch are mechanical but decisive. The ₹450 crore infusion, the ₹108 crore assignment consideration, the ₹50 crore equity subscription and the operational-creditor payments all fall due within 75 days of the plan approval date, the ₹75 crore performance guarantee is forfeited on default or withdrawal, and the one-year window for statutory approvals runs from the same date. The pending ₹12.23 crore section 66 application against the suspended directors continues, with any recovery now flowing to the consortium rather than the lenders.

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