NCLAT to hear creditors' plea challenging Subhash Chandra’s repayment plan

HDFC Bank is set to contest the National Company Law Tribunal's (NCLT) nod for Subhash Chandra's repayment plan of ₹6.5 crore in his personal insolvency proceedings. The bank argues that it will only recover 3.2% of its total claim under the approved plan. HDFC Bank had voted against the plan. The bank is now contemplating an appeal before the National Company Law Appellate Tribunal (NCLAT).

The ruling came from third judicial member Nilesh Sharma on Tuesday after the original two-member NCLT bench had divergent views. Sharma forwarded the matter to the regular bench for further instructions on the plan's implementation. The case against Chandra is due to his personal guarantees for loans taken by several Essel and Zee-linked companies.

Only around ₹2,574 crore of the claims pertain to loans where Chandra gave personal guarantees at the time of initial borrowing. The remainder of his guarantees were given later as additional security. The lenders involved remain accountable for their respective loans. The repayment plan allocates about ₹1,494 crore to be paid by these companies, in addition to ₹6.25 crore from Chandra's personal assets.

Creditors can still pursue recovery from the companies and their securities. Chandra insists he never personally borrowed money from the creditors. He only signed personal guarantees. His net worth in 2024 stands at ₹31.79 crore, including a property valued at ₹25 crore. The repayment plan received backing from 80.81% of creditors by value.

Other banks like HDFC Bank, LIC Housing Finance, Axis Bank, Canara Bank, RBL Bank, and Union Bank opposed the plan. Sharma's decision considered procedural issues but found them not significant enough to reject the plan. The final order from the regular bench is pending.