Lenders Fight Subhash Chandra's ₹6.5 Cr Debt Plan in NCLAT
Lenders Fight Subhash Chandra's ₹6.5 Cr Debt Plan in NCLAT
Major banks like HDFC, Axis, and Canara challenge NCLT's approval of Subhash Chandra's ₹6.5 crore debt plan. Will creditors get their due? Follow the high-stakes legal battle!
Major financial institutions, including HDFC Bank, Axis Bank, Canara Bank, RBL Bank, and Union Bank of India, are taking a united stand against the National Company Law Tribunal's (NCLT) approval of Subhash Chandra's debt repayment plan. This significant legal move unfolds at the National Company Law Appellate Tribunal (NCLAT), where lenders are challenging a plan that proposes a total payout of ₹6.5 crore.
Under the NCLT-approved framework, a mere ₹6.25 crore is earmarked for distribution among the numerous creditors, with the remaining ₹25 lakh allocated to cover the costs associated with the insolvency process. This proposal has been met with strong opposition from the banks, many of whom had voted against it initially.
For instance, HDFC Bank reportedly expects to recover only about 3.2% of its total claim under this payout structure, highlighting the severe haircuts lenders are facing.
The NCLT's approval of the plan came after Nilesh Sharma, a judicial member, cleared the proposal.
Sharma, in his observations, noted that creditors had actively participated in the proceedings without establishing sufficient prejudice. He further argued that the tribunal should not substitute its commercial judgment for a decision backed by the required majority of creditors.
However, it's important to note that Sharma's stance is yet to be formalized into a final order, as the matter awaits final directions from the regular bench.
Government sources have clarified an important distinction regarding Chandra's debt.
These personal insolvency proceedings do not stem from direct loans running into thousands of crores taken by Chandra personally.
Instead, the proceedings were triggered by personal guarantees he extended for loans secured by various entities linked to Essel and Zee.
Of the total outstanding debt, approximately ₹2,574 crore pertains specifically to claims where Chandra provided personal guarantees at the time of the initial loan disbursement, with subsequent guarantees given as secondary security. This complex web of guarantees is now at the heart of the legal dispute, as lenders seek a more equitable resolution.
