Union and Canara Bank Set to Appeal NCLT’s Order on Chandra Case
MUMBAI: Canara Bank and Union Bank of India are contesting the National Company Law Tribunal’s (NCLT) approval of a repayment plan proposed by Zee group founder Subhash Chandra. The plan allows creditors to recover only 0.03% of their admitted claims related to Chandra’s liabilities as a personal guarantor. Both banks argue that the plan was approved despite significant opposition from public-sector creditors.
The insolvency proceedings were initiated by Indiabulls Housing Finance against Chandra. Canara Bank holds a 1.6% voting share, while Union Bank of India has a 0.76% share. Both banks opposed the repayment plan and sought its rejection. LIC Housing Finance, with a 6.1% voting share, also voted against the plan. However, it received backing from private creditors holding 80.8% of the voting share, leading to its approval by the NCLT.
The total admitted claims amount to Rs 22,006 crore, with the repayment plan proposing to pay Rs 6.5 crore. This includes Rs 6.3 crore to creditors and Rs 25 lakh for process costs, resulting in a 99.9% haircut for creditors. Canara Bank has requested a forensic audit but could not pursue it due to its minority voting share. Consequently, the bank is challenging the NCLT order before the National Company Law Appellate Tribunal (NCLAT).
On Thursday, HDFC Bank also confirmed plans to appeal the NCLT order before the NCLAT. HDFC’s claim of Rs 697.59 crore represents approximately 3.17% of the total admitted claims. Subhash Chandra disputes the Rs 22,000 crore liability, stating it reflects historical claims filed in 2022. He claims that the objecting creditors’ claims total Rs 3,992 crore, with Rs 620 crore already settled. Chandra maintains that he is merely a personal guarantor and did not borrow the funds himself.
Lenders have expressed dissatisfaction with the finding that Chandra possesses only about Rs 6 crore in personal assets, especially since his house is also mortgaged. Union Bank of India has similarly rejected the resolution plan and is now challenging the NCLT’s decision before the NCLAT.
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