HDFC Bank is exploring an appeal against a National Company Law Tribunal (NCLT) order approving a repayment plan that would recover just Rs 6.5 crore against claims of about Rs 22,006 crore made against Zee Group founder Subhash Chandra.
The NCLT this week approved the repayment plan relating to Chandra’s personal guarantees for loans taken by companies associated with him. The plan, backed by 80.8% of voting creditors, effectively represents a 99.97% haircut on the admitted claims.
The order, however, does not affect the lenders’ rights to pursue the underlying borrowing companies for repayment of their outstanding dues.
HDFC Bank’s claim of about Rs 698 crore accounted for 3.2% of the total claims. Other lenders that opposed the plan, collectively representing around 15% of the voting share, include Axis Bank, Canara Bank, RBL Bank, Union Bank UK, IDBI Trusteeship and LIC Housing Finance.
Creditors defend Rs 6.5-crore repayment plan
Creditors that supported the resolution argued that the plan offered a better recovery than sending Chandra into bankruptcy, given his limited personal assets.
According to the resolution professional, Chandra’s net worth was estimated at Rs 31.8 crore, including a house worth around Rs 25 crore that had been mortgaged.
Chandra has disputed the approximately Rs 22,000-crore liability, saying the figure largely reflected historical claims filed in 2022.
He maintained that he had acted only as a personal guarantor and had not personally borrowed the money. According to Chandra, many of the guarantees were provided after group companies defaulted, following what he described as lenders making “emotional appeals” and warning that employees could lose their jobs if guarantees were not provided.
Chandra said claims raised by objecting creditors amounted to around Rs 3,992 crore, of which Rs 620 crore had been settled. The borrowing companies had also offered another Rs 1,063 crore to Rs 1,113 crore toward those claims.
The remaining claims of around Rs 16,201 crore held by supporting creditors were also being pursued against the principal borrowers, according to the arguments before the tribunal.
LIC Housing Finance said the NCLT order does not affect the corporate liabilities of the underlying borrowers or the securities available to lenders.
Lenders challenge creditor eligibility
The dispute also centers on the eligibility of certain creditors that voted in favour of the repayment plan.
Dissenting lenders alleged that Veena Investments, Direct Media Distribution Ventures, World Crest Advisors, Lemonade Capital Advisors and Corpcall Capital Advisors were related or associate entities and collectively controlled between 61.8% and 62% of the voting rights.
They argued that this made the entities ineligible to participate under Section 109(4)(b) of the Insolvency and Bankruptcy Code.
The lenders cited, among other issues, Veena Investments’ control by Sushila Devi Goel, the wife of Jawahar Goel, who is Chandra’s brother. They also pointed to links involving partners of Lemonade Capital Advisors and Corpcall Capital Advisors with companies identified as related parties in Veena Investments’ financial disclosures.
The claims against Chandra stem from personal guarantees linked to borrowings by Vivek Infracon, Spirit Textiles and Churu Enterprises, as well as mortgage-backed facilities involving Essel Corporate Resources and Jayneer Infrapower.
99.97% haircut sparks political reaction
The size of the proposed haircut has drawn widespread attention, with Congress general secretary Jairam Ramesh criticising the NCLT-approved plan calling it not a haircut but a ‘mundan’.
“The National Company Law Tribunal has just approved a repayment plan of a noted businessman under which creditors will receive only Rs 6.5 crores against admitted claims of around Rs 22,006.57 crore,” Ramesh said, describing the outcome as a “complete mockery” of the Insolvency and Bankruptcy Code, 2016.
Former businessman Vijay Mallya also commented on the development in a post on X. Referring to Chandra as his friend, Mallya said, “If true, many congratulations to my friend Subhash.”
Mallya contrasted Chandra’s outcome with his own case, claiming that banks and the government had recovered Rs 14,100 crore against a judgment debt of Rs 6,203 crore while continuing to pursue him.
He ended his post with the phrase “Indian Debt Resolution Justice.”
With HDFC Bank now considering an appeal, the tribunal’s decision could face further scrutiny over both the steep haircut and the eligibility of creditors that supported the repayment plan.
