The dispute over Zee Group founder Subhash Chandra's repayment plan of ₹6.25 crore against a debt of ₹22,006 crore has deepened. Lenders have challenged the NCLT's decision in the NCLAT.
The troubles for Zee Group founder Subhash Chandra are far from over. Lenders have knocked on the doors of the National Company Law Appellate Tribunal (NCLAT) to challenge the National Company Law Tribunal's (NCLT) decision approving his repayment plan.
In this matter, LIC Housing Finance and some other banks have filed an appeal.
The NCLAT has accepted the lenders' request for an urgent hearing. The appellate tribunal has scheduled the hearing for Tuesday, September 1, at 10 am.
Earlier on Monday, Solicitor General Tushar Mehta, appearing for the lenders, had appealed to the NCLAT for an early hearing of the case.
The root of this entire dispute is the NCLT's decision on August 25, which approved the repayment plan presented by Subhash Chandra.
Under this plan, lenders are to be paid a mere ₹6.25 crore and ₹25 lakh for the expenses of the insolvency process.
This proposal becomes even more startling when it is revealed that the total amount of admitted claims against Chandra is approximately ₹22,006.57 crore. This is why several banks and financial institutions have raised serious questions about this decision.
The case is related to the personal guarantees that Subhash Chandra had given for loans taken by companies associated with the Essel Group.
The objecting banks argue that five entities were associated with Subhash Chandra and should not have been allowed to vote on the repayment plan.
According to the NCLT's 144-page order, it was due to the votes of these five entities that the repayment plan received a massive approval of 80.814% in the Committee of Creditors (CoC).
The five entities under scrutiny include:
Lenders, led by HDFC Bank and IDBI Trusteeship Services, argue that these five entities fall under the category of 'associates' as per the Insolvency and Bankruptcy Code (IBC). Therefore, their votes should not have been counted.
Several major financial institutions are upset with this decision and have openly opposed it.
HDFC Bank, which holds about 3.2% of the total claims, had already opposed the repayment plan. Meanwhile, Canara Bank (1.60% voting share) also opposed the plan and demanded a forensic audit, which was not accepted due to its low voting share.
Union Bank of India (UK) has also clarified that it had rejected the plan and will immediately challenge it in the NCLAT. Furthermore, LIC Housing Finance has stated that it will file an appeal against the decision along with other public financial institutions.
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