HDFC Bank is considering moving the National Company Law Appellate Tribunal (NCLAT) against a repayment plan approved for Zee founder and promoter Subhash Chandra, after the lender opposed the settlement during insolvency proceedings. The plan requires Chandra to pay Rs 6.5 crore against creditor claims that were cited at around Rs 22,006 crore in the proceedings.
HDFC Bank said its own admitted claim accounted for only 3.2 per cent of the total amount, but maintained that it had voted against the resolution. The lender is now examining its legal options against the order approved by the National Company Law Tribunal (NCLT).
In a statement issued on Thursday, HDFC Bank said it had inherited the relevant facility from HDFC Limited and had opposed the proposed settlement during the insolvency process.
“With regard to the referred NCLT matter, HDFC Bank admitted claim was only 3.2 per cent of the total stated amount. Bank inherited this facility, which was previously provided by HDFC Limited. HDFC Bank had opposed this settlement and had voted against this resolution, which was approved by the majority. The Bank is exploring an appeal at NCLAT,” the lender said in an official statement.
The resolution nevertheless secured sufficient support from creditors and was approved by the tribunal. HDFC Bank’s potential appeal could now take the dispute to the appellate stage.
Chandra’s Office Disputes Rs 22,006 Crore Figure
Chandra’s office has challenged the interpretation of the total liabilities mentioned in the proceedings, saying the figure attributed to his personal guarantee obligations was substantially lower.
According to his office, the total claim against Chandra in his capacity as a personal guarantor was Rs 3,992 crore rather than Rs 22,006 crore. “Chandra has not borrowed any money from any lender. Dr Chandra is only a personal guarantor,” the statement said.
It added that Rs 620 crore of the claims had already been settled, while borrowing entities had proposed an additional payment of Rs 1,063 crore.
Chandra’s office also said the total outstanding debt of the companies stood at close to Rs 45,000 crore as of January 24, 2019, and that nearly Rs 43,000 crore had been repaid since then.
“That includes many of the lenders named in this order as well.”
The statement further clarified the distinction between guarantees and claims filed in the insolvency case.
“Total guarantees signed were for approximately Rs 22,000 crores. Total claims in the case in point filed were totaling Rs 22,006 crores and admitted Rs 21,696 crores,” it said.
NCLT Clears Rs 6.5 Crore Repayment Plan
The NCLT approved Chandra’s repayment proposal under Section 114 of the Insolvency and Bankruptcy Code as part of his personal insolvency resolution process.
Based on the admitted claims of Rs 21,696 crore, the Rs 6.5-crore payout translates into a recovery of roughly 0.03 per cent for creditors. This means lenders would effectively face a haircut of nearly 99.97 per cent on the admitted amount.
The liabilities are connected to Essel Group companies for which Chandra had provided personal guarantees.
The case was heard by a three-member bench after the original two-member bench delivered a split decision. Nilesh Sharma, a judicial member, was subsequently appointed as the third member to resolve the deadlock.
HDFC Bank was among several lenders that opposed the plan. Other objectors included Axis Bank, Canara Bank, RBL Bank and Union Bank of India.