Union, Canara Bank to appeal NCLT’s Chandra order

Canara Bank, Union Bank challenge NCLT’s approval of Subhash Chandra’s repayment plan offering creditors just 0.03% recovery.

MUMBAI: Canara Bank and Union Bank of India are challenging NCLT’s approval of Zee group founder Subhash Chandra’s repayment plan, under which creditors would recover 0.03% of their admitted claims relating to his liabilities as a personal guarantor, arguing that the plan was approved despite opposition from public-sector creditors.The insolvency proceedings were initiated by Indiabulls Housing Finance against Chandra. Canara Bank, which has a 1.6% voting share, and Union Bank of India, which has 0.76%, opposed the repayment plan and sought its rejection. LIC Housing Finance, with a 6.1% voting share, also voted against the plan. However, the plan secured the support of private creditors holding an 80.8% voting share and was approved by NCLT.The total admitted claims stood at Rs 22,006 crore, of which Rs 6.5 crore was proposed to be paid, including Rs 6.3 crore to creditors and Rs 25 lakh towards process costs. This amounts to a 99.9% haircut, with creditors recovering about 0.03% of their admitted claims.Canara Bank has said it sought a forensic audit, but the request could not be pursued because of its minority voting share. The bank is therefore challenging National Company Law Tribunal (NCLT) order before National Company Law Appellate Tribunal (NCLAT).On Thursday, HDFC Bank confirmed that it plans to appeal NCLT order before NCLAT. Its claim of Rs 697.59 crore accounted for about 3.17%, or 3.2%, of the total admitted claims.Zee group founder Subhash Chandra has disputed the Rs 22,000 crore liability, saying it reflected historical claims filed in 2022. He put the claims of objecting creditors at Rs 3,992 crore, of which Rs 620 crore had been settled, while borrowing entities had offered another Rs 1,063-1,113 crore. The remaining Rs 16,201 crore of claims by creditors who supported the plan were also being addressed by the principal borrowers. Chandra said he was only a personal guarantor and had not himself borrowed the money.Lenders are also not satisfied with the finding that Chandra had only about Rs 6 crore in personal assets, particularly since his house was also mortgaged. Union Bank of India (UK) has similarly said it rejected the resolution plan and argued before NCLT that it should not be approved. It is now challenging NCLT’s decision before the NCLAT.