Plethico agrees to pay $23 million in cash to Aurobindo to settle charges

Aurobindo had charged Natrol's previous owner Plethico with financial fraud

Plethico Pharma, the previous owner of Natrol Inc (now owned by Aurobindo Pharma), has agreed to pay $23.3 million (Rs 14,512 crore) in cash and certain global intellectual property (IP) rights to Natrol to settle financial fraud accusations levelled by the latter.

“Natrol LLC had approached the Delaware Bankruptcy Court on April 6, 2015, in respect of acquisition of assets of Natrol, USA regarding certain discrepancies and nonperformance of obligations by erstwhile owners, Plethico. Subsequently, discussions were held between Natrol LLC and Plethico group for resolution,” Aurobindo said in a stock exchange filing.

Based on the discussions, a settlement agreement has been reached, wherein Plethico group would assign $23.3 million in cash in milestone payments, certain global IP rights and other assets, Aurobindo said in a statement.

Aurobindo’s wholly-owned subsidiary, Aurobindo Pharma USA, had emerged the highest bidder for acquisition of Natrol Inc under a process approved by the Bankruptcy Court. This was informed to the stock exchanges on November 12, 2014.

The above acquisition, completed by Aurobindo Pharma USA Inc, in December 2014, includes manufacturing assets, personnel, commercial infrastructure etc, including nutraceutical brands in the US of Natrol along with an agreement to take certain liabilities with a bid of $132.5 million (Rs 82,530 crore).

Out of these liabilities, Aurobindo’s US subsidiary pointed out certain financial discrepancies amounting to fraud involving a $25-million (Rs 15,571 crore) contract with a fictitious construction company.