New Delhi, August 27: HDFC Bank is gearing up to appeal against the National Company Law Tribunal (NCLT) decision that granted significant relief to Subhash Chandra, founder of Essel Group, in his personal bankruptcy resolution process. The bank announced on Thursday that it is considering filing an appeal before the National Company Law Appellate Tribunal (NCLAT).
This response from HDFC Bank follows the NCLT’s approval of a repayment plan, which allows Chandra to pay only ₹6.5 crore against approved claims totaling approximately ₹22,006.57 crore. This represents a staggering 99.97% haircut for creditors.
A spokesperson for HDFC Bank informed NDTV Profit that the bank’s approved claim constituted only 3.2% of the total claims. This loan facility was inherited by the bank following the merger with HDFC Limited.
The spokesperson further explained, “HDFC Bank’s approved claim in the NCLT case was merely 3.2% of the total amount. This loan facility was initially provided by HDFC Limited and was transferred to the bank post-merger.” The bank is now contemplating the option of appealing against this order in the NCLAT.
Additionally, the bank clarified that the necessary provisions for the related loan had already been made, and this account was included in the bank’s books as part of the merger process.
Previously, the NCLT had approved the repayment plan under Subhash Chandra’s personal bankruptcy resolution process. According to the proposal, Chandra was required to pay only ₹6.25 crore against creditors’ approved claims of ₹22,006.57 crore, with ₹25 lakh allocated for process costs.
During the hearings, several creditors, including LIC Housing Finance, opposed this plan. According to LIC Housing Finance’s argument recorded in the NCLT order, its approved claim was ₹1,322.39 crore, while the proposed payment was merely ₹38.09 lakh, amounting to approximately 0.028% of its total claim. The company argued that such a minimal recovery plan should not be approved.
However, while delivering the verdict as the third member, NCLT judicial member Nilesh Sharma approved the plan under Section 114 of the Insolvency and Bankruptcy Code (IBC). He dismissed the objections raised by creditors who claimed that the recovery amount was extremely low and that the plan was not viable.
Notably, the earlier decision by the two-member NCLT bench had been divided. Following differing opinions from both members, the tribunal’s chairman appointed Nilesh Sharma as the third member to resolve the case.
Creditors, led by LIC Housing Finance, argued that the proposed repayment plan was “unrealistic and contrary to law.” They contended that accepting a payment of only ₹6.25 crore against approved claims exceeding ₹22,006 crore would be against the interests of creditors.
Leave a Comment