Canara Bank and Union Bank Challenge NCLT Approval of Subhash Chandra’s Repayment Plan
MUMBAI: A significant legal battle is brewing in India’s insolvency landscape as major public-sector lenders, including Canara Bank and Union Bank of India, have formally moved to challenge a controversial order by the National Company Law Tribunal (NCLT). The tribunal had previously approved a repayment plan for Zee Group founder Subhash Chandra, which critics argue offers a negligible recovery for creditors.
A Controversial “Haircut”
The repayment plan in question involves personal guarantor liabilities tied to insolvency proceedings initially sparked by Indiabulls Housing Finance. Under the approved scheme, total admitted claims amounting to Rs 22,006 crore are set to be settled for a mere Rs 6.5 crore—a staggering 99.9% “haircut” that results in a recovery of only 0.03% for creditors.
The approval of this plan has sparked outrage among state-run banks. While the proposal managed to secure 80.8% support from private creditors, it faced stiff opposition from public-sector lenders. Canara Bank, holding a 1.6% voting share, and Union Bank of India, with a 0.76% share, both formally opposed the plan during proceedings. LIC Housing Finance, representing a 6.1% voting share, also registered its dissent.
Lenders Head to NCLAT
Aggrieved by the NCLT’s decision, the dissenting banks have approached the National Company Law Appellate Tribunal (NCLAT). Canara Bank has highlighted that its previous requests for a forensic audit into the matter were sidelined due to its minority voting status. HDFC Bank, which holds a claim of Rs 697.59 crore (approximately 3.2% of the total admitted claims), has also confirmed its intent to join the appeal against the NCLT order.
Furthermore, lenders have expressed deep skepticism regarding the disclosure of Subhash Chandra’s personal assets. Reports indicate that the resolution plan identifies only Rs 6 crore in personal assets for the Zee founder—a figure that banks find difficult to accept, particularly given that his primary residence remains mortgaged.
Subhash Chandra’s Defense
In response to the mounting pressure, Subhash Chandra has disputed the validity of the Rs 22,000 crore liability figure, asserting that it comprises historical claims filed as early as 2022.
Chandra maintains that he serves solely as a personal guarantor rather than the primary borrower. He argues that of the Rs 3,992 crore in claims raised by objecting creditors, Rs 620 crore has already been settled, while borrowing entities have offered an additional sum ranging between Rs 1,063 crore and Rs 1,113 crore. He further noted that the remaining Rs 16,201 crore in claims, held by supporters of the plan, are being addressed by the respective principal borrowers.
As the case moves to the NCLAT, the proceedings are expected to set a significant precedent regarding the rights of dissenting creditors and the standards for personal guarantor settlements in Indian insolvency law.
