The insolvency case involving Zee Group founder Subhash Chandra is heading for another legal battle, with Union Bank of India deciding to challenge the National Company Law Tribunal’s (NCLT) approval of his repayment plan.
Union Bank said it will approach the National Company Law Appellate Tribunal (NCLAT) against the NCLT order. The move comes after the bank and other public-sector creditors opposed the repayment plan during the insolvency proceedings.
The personal insolvency proceedings against Chandra were initiated by Indiabulls Housing Finance Ltd. The NCLT approved a plan under which Chandra would pay about ₹6.5 crore against admitted creditor claims of approximately ₹22,006.57 crore.
The plan received the required majority support from creditors, with reports putting the voting support at around 80.81%. However, several lenders, including Union Bank, Canara Bank and LIC Housing Finance, voted against it and urged the tribunal not to approve the proposal.
Union Bank said the plan was approved despite the objections raised by public-sector financial institutions because it secured the required majority among other creditors. The bank has now decided to take the matter to the appellate tribunal.
The case has attracted significant attention because of the exceptionally low recovery proposed from Chandra's personal estate compared with the total admitted claims. However, the reported 99.97% haircut should not be interpreted as a complete write-off of ₹22,000 crore in bank loans. The ₹22,006 crore figure represents claims admitted against Chandra as a personal guarantor for loans taken by several Essel/Zee-linked companies.
The underlying corporate borrowers continue to remain liable for their debts, while the approved plan also envisages payments by those borrowing entities.
Chandra has maintained that he did not personally borrow the ₹22,000 crore and that his role was primarily that of a personal guarantor. He has also disputed the way the total claims against him have been characterised.
The latest appeal means the dispute over the repayment plan will now move to the NCLAT, where the objections raised by dissenting creditors are likely to receive further scrutiny.
