Essel Group Chairman Subhash Chandra Addresses Lender Concerns

Essel Group Chairman Subhash Chandra has affirmed that entities associated with his group are committed to reconciling and settling their outstanding dues with various lenders. This assurance comes as several creditors are contemplating challenging a recently approved repayment plan.

Chandra clarified that he holds no personal debt, distinguishing this from the ₹22,000 crore in personal guarantees he provided for loans taken by other group-linked entities.

Understanding the Debt and Guarantees

The total personal guarantees extended by Chandra amounted to ₹22,000 crore, with a portion issued at the time of initial borrowing and the remainder signed after defaults occurred.

• Approximately ₹4,800 crore in guarantees were issued when funds were initially borrowed.
• The balance of the ₹22,000 crore in guarantees was signed after defaults on loans had already taken place.

Under a repayment plan sanctioned by the National Company Law Tribunal (NCLT), Subhash Chandra is personally obligated to pay ₹6.25 crore. Concurrently, the primary borrowing entities are slated to repay a more substantial sum.

• Primary borrowing entities are set to repay around ₹1,494 crore as part of the NCLT-approved plan.

Lender Involvement and Repayment Status

Chandra’s office detailed that 10 banks and financial institutions had disbursed significant funds to promoter-linked entities. These institutions include prominent names in the Indian financial sector.

• Indiabulls Housing Finance
• HDFC Group
• Axis Bank Group
• Canara Bank

These institutions collectively disbursed ₹4,808 crore to the promoter-linked entities. Of this amount, a substantial portion has already been repaid, leaving a specific balance outstanding.

• Total disbursed by 10 institutions: ₹4,808 crore.
• Amount already repaid: ₹3,803 crore.
• Remaining balance: approximately ₹998 crore.

Discrepancies in Lender Claims

Despite the stated balance, lenders had filed claims far exceeding this amount. This disparity highlights the complexity in reconciling the outstanding figures.

• Lenders initially filed claims totaling ₹5,311 crore against the ₹998 crore balance.
• After accounting for ₹1,049 crore in settled or paid claims, the remaining claims stood at ₹4,262 crore.

The difference from an earlier reported figure of ₹3,992 crore is attributed to the exclusion of certain accounts where creditors did not participate in the repayment plan vote. Chandra expressed his hope that lenders would directly engage with borrowers to reconcile accounts and facilitate recovery of dues.

Creditor Opposition and Legal Proceedings

Several lenders have voiced opposition to the NCLT-approved plan, indicating potential further legal action. This suggests ongoing challenges to the resolution process.

LIC Housing Finance and HDFC Bank are among the lenders opposing the plan and are reportedly considering appeals to the National Company Law Appellate Tribunal (NCLAT). The NCLT’s Delhi chapter approved the plan following a split verdict and a referral to a third member, with the Committee of Creditors ultimately approving it with an 80.8% voting share.

Insolvency proceedings against Subhash Chandra commenced in 2022 after Indiabulls Housing Finance approached the NCLT regarding his personal guarantees for corporate loans, setting the stage for the current complex financial reconciliation.