By Shishir Prashant 
PrashantNews
The legal battle over Essel Group founder Subhash Chandra’s personal insolvency proceedings is set to intensify, with LIC Housing Finance Ltd (LIC HFL), Canara Bank and Union Bank of India (UK) Ltd on Saturday deciding to challenge the National Company Law Tribunal’s (NCLT) approval of his repayment plan before the National Company Law Appellate Tribunal (NCLAT).
The lenders opposed the repayment plan, which envisages a payment of only ₹6.25 crore to creditors, despite admitted claims of approximately ₹22,006.57 crore against Chandra. An additional ₹25 lakh is earmarked towards insolvency process costs, taking the total amount under the plan to around ₹6.5 crore.
LIC HFL said the plan was approved because other financial creditors, holding an aggregate 80.81 per cent voting share, voted in its favour.
“LIC Housing Finance Limited and other public financial institutions, including Canara Bank and Union Bank of India (UK) Ltd., voted against the Repayment Plan proposed by Dr. Subhash Chandra,” LIC HFL said. The company added that it would immediately file an appeal before the NCLAT along with the other public financial institutions.
Canara Bank said it held a 1.60 per cent voting share, while Union Bank of India (UK) and LIC HFL held 0.76 per cent and 6.09 per cent, respectively. The three lenders opposed the plan, but their combined voting strength was insufficient to prevent its approval by the majority creditors.
Canara Bank also said it had sought a forensic audit, but the request could not be allowed because of its minority voting share. The bank has said it will appeal against the NCLT order before the NCLAT.
Union Bank of India (UK) Ltd has similarly said it rejected the plan and had urged the NCLT not to approve it. The bank said the plan was nevertheless approved because of the majority vote of certain private creditors and that it would immediately challenge the decision before the appellate tribunal.
The scale of the proposed repayment has emerged as the biggest point of contention. LIC HFL’s own admitted claim stood at about ₹1,322.39 crore, against which the plan provides only around ₹38.09 lakh, according to the NCLT proceedings.
The NCLT had approved the repayment plan on August 25 in the personal insolvency proceedings initiated against Chandra. The approval has effectively resulted in a recovery of only about 0.03 per cent of the total admitted claims, representing a 99.97 per cent haircut.
The proposed appeals before the NCLAT could now determine whether the tribunal’s approval of the majority-backed repayment plan withstands the objections raised by the dissenting lenders.