Subhash Chandra insolvency plan faces challenge from LIC HF, Union Bank, Canara Bank

Union Bank of India (UK) Ltd, Canara Bank and LIC Housing Finance Ltd will move the National Company Law Appellate Tribunal (NCLAT) against the National Company Law Tribunal’s (NCLT) approval of a repayment plan proposed by Essel Group founder Subhash Chandra.

The lenders had opposed the plan, which proposes payment of ₹6.25 crore against admitted claims of around ₹22,006.57 crore. The plan was approved after creditors supporting it secured 80.81% of the voting share. 

Union Bank of India (UK) Ltd said it had rejected the resolution plan along with other public sector entities and had sought its rejection before the NCLT.

“However, due to majority vote of certain private creditors, the same plan has been approved by NCLT,” the bank said in a statement.

“Now, Union Bank of India (UK) Ltd is immediately challenging the decision of NCLT before NCLAT,” it added.

Canara Bank, which had a 1.60% voting share, said it had opposed the repayment plan along with Union Bank of India (UK), which had a 0.76% voting share, and LIC Housing Finance, which had a 6.09% voting share.

“Canara Bank (1.60% voting share) alongwith other public sector entities Union Bank of India (0.76% voting share) and LIC Housing Finance Ltd (6.09% voting share) opposed and voted against the repayment plan submitted by Dr Subhash Chandra for ₹6.25 crore. However, the repayment plan was approved by other private creditors with a majority vote (80.81% voting share),” Canara Bank said.

The bank added: “In fact, Canara Bank demanded for a forensic audit but the same could not be allowed in view of our minority voting share.”

“The bank is filing an appeal in NCLAT against the NCLT order,” it said.

LIC Housing Finance also said it would challenge the order. “LIC HFL will immediately file an appeal before the Hon’ble NCLAT, along with the other public financial institutions,” it said on X.

What is the case?

The insolvency proceedings against Chandra stem from a personal guarantee he had furnished for loans taken by companies linked to the Essel Group. Indiabulls Housing Finance had approached the NCLT under Section 95 of the Insolvency and Bankruptcy Code (IBC), seeking initiation of insolvency proceedings against him as a personal guarantor. 

The NCLT’s records show that the petition was filed in 2022 and related to a guarantee given for borrowings by Vivek Infracon Pvt Ltd.

The case later moved to the repayment-plan stage, where Chandra proposed paying ₹6.25 crore to creditors, along with ₹25 lakh towards insolvency resolution process costs. 

The plan was eventually approved by the NCLT despite objections from several public-sector and financial creditors.