3 days ago
Lenders Challenge NCLT Approval of Subhash Chandra’s Insolvency Plan
A tribunal approved a repayment plan for businessman Subhash Chandra.
The plan proposes paying creditors about Rs 6.5 crore.
The creditors had admitted claims totaling about Rs 22,006.57 crore.
Some banks said five companies connected to Chandra’s family had too much voting power.
They argued that the companies should not have been allowed to vote.
The companies’ votes helped the plan receive more than 80% approval.
A third tribunal member rejected the lenders’ objections.
Some lenders now plan to challenge the decision.
The NCLT approved Subhash Chandra’s personal insolvency plan, offering about Rs 6.5 crore against admitted claims of Rs 22,006.57 crore.
Five entities linked by lenders to Chandra’s family allegedly held 61.78% of the creditors’ committee voting share.
Their votes contributed to the plan receiving 80.814% approval from the committee of creditors.
Dissenting lenders argued the entities were associates or related parties and should not have been allowed to vote.
HDFC Bank is considering an appeal, while Canara Bank says it is appealing the order before the NCLAT.
- Who
- Subhash Chandra, five family-linked entities, dissenting lenders including HDFC Bank and Canara Bank, and the National Company Law Tribunal.
- What
- The NCLT approved Chandra’s personal insolvency resolution plan, which proposes a payment of about Rs 6.5 crore against admitted claims of Rs 22,006.57 crore.
- Where
- Before the National Company Law Tribunal in India.
- When
- The approval followed a split NCLT decision and a ruling by third member Nilesh Sharma; the articles do not give a specific date.
- Why
- The plan was approved after receiving 80.814% committee support, despite objections that five entities linked to Chandra’s family were related parties and should not have voted.
Dissenting lenders
NCLT majority and plan supporters
Eligibility to vote
Dissenting lenders
Lenders argued that the five entities were associates or related parties of Chandra and should have been barred from voting.
NCLT majority and plan supporters
Third member Nilesh Sharma held that an entity is an associate only when the debtor personally owns at least 51% of its share capital or directly controls its board.
Validity of claims
Dissenting lenders
Objecting lenders said the claims and underlying guarantees were improperly admitted and argued that the voting process should be reconsidered.
NCLT majority and plan supporters
The objections were rejected by the third NCLT member, whose decision supported counting the entities’ claims and votes.
Repayment plan
Dissenting lenders
Lenders questioned the plan’s fairness and adequacy, citing the large gap between the proposed payment and the admitted claims.
NCLT majority and plan supporters
The plan’s supporters relied on its approval by more than 80% of the committee of creditors.
Key facts
- Proposed repayment
- About Rs 6.5 crore; Canara Bank referred to the plan as a Rs 6.25-crore proposal.
- Admitted claims
- Approximately Rs 22,006.57 crore, according to the NCLT order.
- Voting share
- The five entities allegedly together controlled 61.78% of the creditors’ committee voting share.
- Approval
- The plan received 80.814% approval in the committee of creditors.
- Entities named
- Veena Investments, Direct Media Distribution Ventures, World Crest Advisors, Lemonade Capital Advisors and Corpcall Capital Advisors.
- Lender challenges
- HDFC Bank said it was considering an appeal, while Canara Bank said it was filing an appeal before the NCLAT.
- Other opposing lenders
- Canara Bank, Union Bank of India and LIC Housing Finance voted against the repayment plan.
Sources
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