Lenders Challenge NCLT Approval of Subhash Chandra’s Payout Plan
By Business Desk
Canara Bank, Union Bank, and LIC Housing Finance are set to challenge the NCLT’s approval of Subhash Chandra’s ₹6.25 crore repayment plan, citing creditor objections.
Canara Bank, Union Bank of India (UK) Ltd, and LIC Housing Finance Ltd are preparing to challenge the National Company Law Tribunal’s (NCLT) approval of a repayment plan proposed by Essel Group founder Subhash Chandra. This legal action targets a plan that allocates a minimal payout to creditors despite significant outstanding claims.
The NCLT had endorsed this plan on August 25, which provides ₹6.25 crore to creditors and an additional ₹25 lakh for insolvency process costs. This approval occurred despite strong objections from several financial creditors.
Key Figures in the Repayment Dispute
- Approved payout for creditors: ₹6.25 crore
- Additional amount for insolvency process costs: ₹25 lakh
- Canara Bank’s voting share against the plan: 1.60%
- Financial creditors’ voting share supporting the plan: 80.81%
- Total admitted claims initially: approximately ₹22,006.57 crore
- Subhash Chandra’s stated claims from opposing lenders: ₹3,992 crore
Contesting the Tribunal’s Endorsement
The three lenders, who previously opposed the plan during NCLT proceedings, now intend to appeal this decision before the National Company Law Appellate Tribunal (NCLAT). Canara Bank, holding a 1.60% voting share, explicitly voted against the plan and had requested a forensic audit, which was not pursued due to its minority position.
Union Bank of India (UK) Ltd and LIC Housing Finance also voted against the proposal and will join the appeal. The repayment plan secured approval because financial creditors representing 80.81% of the voting share supported it.
Disputed Claims and Clarifications
A central point of contention involves the significant disparity between the approved payout of ₹6.25 crore and the admitted claims of approximately ₹22,006.57 crore. Subhash Chandra clarified that the ₹22,006.57 crore figure pertains to claims arising from corporate guarantees, not personal borrowings.
He further disputes the total claims attributed to him, stating that the lenders opposing the plan have claims closer to ₹3,992 crore, not ₹22,000 crore. Chandra has reiterated his group’s commitment to fulfilling its outstanding obligations.
The upcoming NCLAT appeals will address the NCLT’s decision and the underlying creditor voting process. These proceedings will determine the path forward for the contested repayment arrangement.