Lenders Fight NCLT Approval of Subhash Chandra’s Low Repayment Plan
By Business Desk
Key lenders are appealing the NCLT’s approval of Subhash Chandra’s repayment plan, which offers a mere ₹6.25 crore against ₹22,000 crore in claims, raising concerns over creditor recovery.
Multiple lenders, including public sector institutions, are appealing to the National Company Law Appellate Tribunal (NCLAT) against the National Company Law Tribunal’s (NCLT) approval of a repayment plan from Essel Group founder Subhash Chandra.
The contentious plan proposes a payment of just ₹6.25 crore against admitted claims totaling approximately ₹22,000.57 crore, indicating a significantly low recovery rate for creditors.
Understanding the Repayment Discrepancy
Despite the minimal recovery, the plan received approval from 80.81 percent of the creditors’ votes, primarily from private entities.
- Canara Bank, holding a 1.60 percent voting share, explicitly voted against the proposal.
- Union Bank of India (UK), with a 0.76 percent voting share, also opposed the plan.
- LIC Housing Finance (LICHFL), which had a 6.09 percent voting share, voted against it.
Canara Bank further revealed that its request for a forensic audit was denied due to its minority voting share in the proceedings.
Lenders Detail Their Opposition
LICHFL, with an admitted claim of ₹1,322.39 crore, stated that the plan offered only ₹38.09 lakh against this amount, deeming the payment terms “unviable and unlawful.” HDFC Bank, which held a 3.2 percent admitted claim and voted against the resolution, is also exploring filing an appeal at the NCLAT.
Background of Insolvency Proceedings
The insolvency proceedings against Subhash Chandra originated from his role as a personal guarantor for loans extended to companies within the Essel Group.
Indiabulls Housing Finance initially approached the NCLT regarding unpaid dues, setting in motion the legal process that has now culminated in these appeals.