After Essel Group founder Subhash Chandra’s repayment plan proposal found approval in the National Company Law Tribunal (NCLT), resistance has come from a group of three state-owned lenders.

Canara Bank, Union Bank of India (UK) Ltd and LIC Housing Finance Ltd are set to challenge the NCLT’s approval of the repayment plan submitted by Chandra in a personal insolvency case filed by Indiabulls Housing Finance Ltd. They are readying to move the National Company Law Appellate Tribunal (NCLAT) soon.

The three public sector lenders had opposed and voted against the repayment plan submitted by Chandra for Rs 6.25 crore, according to statements issued by them.

While Canara Bank had a 1.60% voting share, Union Bank of India had 0.76% and LIC Housing Finance had 6.09%.

The plan, however, was approved by other private creditors holding an aggregate 80.81% voting share.

Canara Bank said it is filing appeal in NCLAT against the NCLT order.

Union Bank of India (UK) Ltd also said it will immediately challenge the NCLT decision before the NCLAT. “In the matter of personal insolvency case filed by Indiabulls Housing Finance Ltd against Chandra, Union Bank along with other public sector undertakings like Canara Bank, LIC Housing Finance etc have rejected the resolution plan and pleaded before the NCLT for not approving the same,” the lender stated on X.

However, the plan was approved by the tribunal due to majority vote of certain private creditors, it added. 

LIC Housing Finance said it had voted against the repayment plan, along with other public financial institutions including Canara Bank and Union Bank. It would immediately file an appeal before the NCLAT, along with the other public entities.

At the centre of the dispute is the NCLT’s repayment approval plan under which Chandra would pay Rs 6.5 crore against admitted creditor claims of about Rs 22,006.57 crore. This would involve a haircut of nearly 99.97% for creditors. 

Earlier, private lender HDFC Bank on Thursday said it is exploring filing an appeal at the NCLAT. It had opposed and voted against the resolution, which was approved by the majority of creditors. 

The bank’s admitted claim was only 3.2% of the total stated claim amount. It had inherited this loan facility from HDFC Ltd, the parent which was later merged with the bank.

LIC Housing Finance’s claim of Rs 1,322 crore faces paltry recovery

LIC Housing Finance Ltd, which has admitted claims of Rs 1,322.39 crore, faces a steep haircut in the insolvency proceedings against Chandra. The recovery amount could be as paltry as Rs 38.09 lakh under the NCLT-approved repayment plan.

The housing finance company, which had facilitated two loan accounts in which Chandra provided a personal guarantee, said it would continue to pursue recovery actions against the principal borrowers no matter what the result of Chandra's personal insolvency proceedings be. Its rights over the mortgage charges on the secured assets against which the financial facilities were originally sanctioned do not go away.

“LIC Housing Finance continues to hold and retain all its rights, security interests, enforcement remedies and recovery avenues over the said secured assets,” the company said.

Chandra had provided personal guarantees for borrowings of companies associated with the Essel Group. In 2024, Indiabulls Housing Finance had initiated the insolvency proceedings against Chandra.