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CHENNAI: The Chennai bench of the National Company Law Tribunal (NCLT) has admitted insolvency resolution proceedings against Orchid Pharma founder and former managing director K. Raghavendra Rao and his wife, company co-founder R. Vijayalakshmi, in their capacity as personal guarantors. The liability against both individuals stands at ₹256.29 crore, comprising principal, interest, and other penal charges linked to loans availed by the pharmaceutical company.
Moratorium Imposed and Claims Invited
Passed on October 16, 2026, and uploaded to the tribunal’s website on October 27, the NCLT order initiates separate insolvency resolution proceedings against Rao and Vijayalakshmi. The action comes roughly six years after Orchid Pharma was acquired by the Dhanuka Group through corporate insolvency proceedings. According to the tribunal’s order, the company had obtained cash credit, term loans, capital term loans, and funded interest term loans, for which Rao and Vijayalakshmi had provided personal guarantees. Despite the change in the company’s ownership, the dues remained unpaid to creditors.
The tribunal has directed Vijayalakshmi’s creditors to submit their claims before the Resolution Professional (RP) by December 4. Following the admission of the insolvency resolution process, a statutory moratorium has come into force on the guarantors’ debts, imposing a legal bar on recovery actions by creditors during the specified period. In the subsequent stage, the debtors will prepare a repayment plan with the assistance of the RP, which will be placed before the creditors for approval via voting. If the repayment plan fails to garner the required support, creditors retain the option to initiate bankruptcy proceedings against the individuals.
Orchid Pharma’s Rise and Corporate Insolvency
K. Raghavendra Rao, recognized as a prominent first-generation entrepreneur in the Indian pharmaceutical sector, founded Orchid Chemicals and Pharmaceuticals on July 1, 1992. He was awarded the Padma Shri in 2011 for his contributions to the pharmaceutical industry. While the company expanded rapidly during its initial years, it later faced severe financial distress and mounting debt obligations.
Corporate insolvency proceedings against the company began in 2017 following a petition filed by lender Lakshmi Vilas Bank before the NCLT. During the first round of resolution, a bid submitted by Ingen Capital failed to materialize and was subsequently cancelled by the tribunal. In the second round, the NCLT approved a resolution plan submitted by Dhanuka Laboratories Limited, a Dhanuka Group entity, on June 25, 2019. Although the National Company Law Appellate Tribunal (NCLAT) later set aside this approval, the Supreme Court overturned the appellate tribunal’s ruling, paving the way for the Dhanuka Group’s resolution plan to take effect.
Personal Liability Remains Separate from Corporate Resolution
Following the conclusion of legal hurdles, Dhanuka Laboratories formally took over the management and control of Orchid Pharma on March 31, 2020. However, the personal guarantees extended by the former promoters for the company’s legacy debts remained unresolved.
The ongoing NCLT proceedings operate independently of the earlier corporate insolvency resolution process completed for the company. Instead, the current action directly examines the individual financial obligations of Rao and Vijayalakshmi arising from their personal guarantees. The settlement of the ₹256.29 crore demand will now depend on the submission of creditor claims, the formulation of a viable repayment plan, and forthcoming legal steps before the tribunal.
