Lenders Fight Subhash Chandra’s ₹6.25 Cr Repayment Plan

Public sector financial institutions are challenging the National Company Law Tribunal’s (NCLT) approval of a repayment plan from Essel Group founder Subhash Chandra. This plan proposes a mere ₹6.25 crore against admitted claims totaling approximately ₹22,006.57 crore.

Several major lenders, including Canara Bank, Union Bank of India (UK), and LIC Housing Finance (LICHFL), have declared their intent to appeal this NCLT decision. They will take their challenge to the National Company Law Appellate Tribunal (NCLAT), citing the exceptionally low recovery rate for creditors.

• Key entities involved in the appeal include:
• Canara Bank
• Union Bank of India (UK)
• LIC Housing Finance (LICHFL)
• The Department of Financial Services (DFS) under the Union finance ministry has also publicly backed these lenders.

The proposed repayment plan outlines:

• Total admitted claims: ₹22,006.57 crore
• Proposed repayment amount: ₹6.25 crore

Despite the low offer, the plan secured 80.81 percent of the creditors’ votes.

However, several public-sector entities registered their opposition to the plan during the voting process. Their dissenting votes highlight the significant concerns regarding the recovery of dues.

• Lenders who voted against the repayment plan include:
• Canara Bank (with a 1.60% voting share)
• Union Bank (with a 0.76% voting share)
• LICHFL (with a 6.09% voting share)
• Private lender IndusInd Bank (with a 1.11% voting share) abstained from voting on the approval.

Understanding the Insolvency Mechanism

These proceedings are linked to Mr. Chandra’s personal insolvency, where he acted as a guarantor for loans extended to various companies affiliated with the Essel Group. The insolvency process itself was initiated by Indiabulls Housing Finance following defaults on these loans.

Canara Bank had also requested a forensic audit related to the matter, but this was not approved due to its minority voting share among the creditors. The impending challenge at the NCLAT signifies continued scrutiny over the resolution of large corporate debts and the recovery prospects for financial institutions in India’s insolvency framework.