Glocal Healthcare Systems Pvt Ltd, the affordable healthcare provider based in Bengal, has reached a settlement with US-based entity UpHealth Holdings, ending three years of acrimonious ownership dispute that spilled into various courts of India and America.

As part of the deal, the city-based entity, founded by former IAS officer Syed Sabahat Azim and his wife Richa Sana Azim, will pay $10 million to the liquidation trustees of UpHealth as the US-based digital healthcare provider is now battling bankruptcy.

In return, the liquidation trustees have also admitted Glocal’s claim of $37.5 million on UpHealth.

Following the completion of bankruptcy proceedings, Glocal will receive a sum proportionate to its claim from the distribution process.

The settlement was approved by the US Bankruptcy Court for the district of Delaware on September 11, where UpHealth Holdings Inc is facing bankruptcy proceedings. On Friday, Calcutta High Court also approved the settlement between the parties.

Glocal, where former Sebi chairman Meleveetil Damodaran is a minority shareholder and former director, will get back complete control of the healthcare provider as part of the deal.

The healthcare provider, which was established in 2010, operates 11 hospitals in India, including four in Bengal.

The management is now hopeful to rapidly scale up operations, which focus on providing quality healthcare at an affordable cost in tier III and IV towns in the country, through the digital medium.

The dispute

When the Covid pandemic was shifting the focus to delivering healthcare through the digital medium, Glocal signed a share purchase agreement with NYSE-listed UpHealth Holding Inc in October 2020, in a bid to rapidly scale up operations.

According to the SPA, UPHI would acquire 90 per cent of Glocal and the existing shareholders of the Indian outfit would be bought out by a mix of cash and stock. The cash component was $22 million, while the stock component had two parts: 7.14 per cent in UpHealth and 2.86 per cent to Sabahat Azim.

A clause in the SPA stated that the value of the UpHealth stock received by the Glocal shareholders would not be less than $110 million, based on the enterprise value of the US-based firm of $1.1 billion.

However, at the end of the lock-in period for the shares issued by UpHealth on June 9, 22, the value came down to $7.18 million, translating into a shortfall of $102.82 million. The partnership broke down soon thereafter.

The UpHealth management took the Indian company to arbitration, which awarded $110 million compensation to the US outfit. Glocal challenged the order and filed suits in India, including criminal cases in Calcutta against UpHealth and its top brass. While the legal wrangle continued, UpHealth went to bankruptcy and the warring parties went to mediation.

With the deal sealed now, Glocal promoters will get control back of the shares parted under the SPA.