Canara Bank, Union Bank move NCLAT, challenge NCLT order in Subhash Chandra personal guarantee case

Canara Bank and Union Bank of India have approached the National Company Law Appellate Tribunal , challenging the NCLT order approving Subhash Chandra’s repayment plan in his personal insolvency proceedings.The lenders have sought an urgent hearing and are likely to press for a stay on the NCLT order.The NCLAT has agreed to hear the matter urgently and is likely to take up the banks’ plea on September 1. In their plea, the banks have argued that the approved plan results in a “haircut” of virtually 99% for lenders.They have also argued that the order could affect the “intent and purpose” of the Insolvency and Bankruptcy Code .

The NCLT had approved a repayment plan under which Chandra would pay around ₹6.5 crore against admitted claims of more than ₹22,000 crore.The proceedings were initiated by Indiabulls Housing Finance against Chandra in relation to personal guarantees he had provided for loans taken by Essel Group companies.Chandra has maintained that he did not personally borrow from the lenders and that the claims relate to guarantees given for loans raised by the group companies.Lenders had opposed the repayment planCanara Bank and Union Bank of India had opposed the repayment plan before the NCLT.

In statements issued earlier, LIC Housing Finance and HDFC Bank had also said they voted against the plan.Canara Bank, which held a 1.60% voting share, said it, along with Union Bank of India and LIC Housing Finance , voted against the ₹6.25 crore repayment plan.The plan was approved with the support of other financial creditors holding 80.81% of the voting share.Also read: NCLT clears Subhash Chandra's ₹6.5 cr repayment plan; he says firms repaid ₹43,000 cr of duesCanara Bank had also sought a forensic audit, but said this could not be allowed given its minority voting share.Union Bank of India had said it rejected the resolution plan along with other public sector entities and had opposed its approval before the NCLT.

The bank subsequently said it would challenge the NCLT’s decision before the NCLAT.LIC Housing Finance had also said it would file an appeal before the NCLAT along with other public financial institutions, while HDFC Bank had said it was exploring an appeal.The NCLT order approved repayment of about ₹6.5 crore against admitted claims of more than ₹22,000 crore, resulting in a haircut of nearly 99.97% for lenders.