- Union Bank of India is set to challenge the National Company Law Tribunal's (NCLT) approval of a resolution plan in the personal insolvency proceedings against Essel Group Chairman Subhash Chandra, according to a statement issued on Saturday.
- Union Bank of India, along with other creditors including Canara Bank and LIC Housing Finance, voted against the resolution plan and opposed its approval before the NCLT.
- Despite their objections, the tribunal approved the resolution plan after it secured the required majority support from certain private-sector creditors.
- Union Bank of India said it will now approach the National Company Law Appellate Tribunal (NCLAT) to challenge the NCLT's order.
- The development follows a similar move being considered by HDFC Bank, which said it was exploring an appeal against the NCLT order, noting that only 3.2 per cent of its total claim of Rs 680 crore had been admitted.
- The NCLT's decision has drawn attention from lenders because of the substantial haircuts involved, with creditors expected to recover only a small portion of their claims under the approved resolution plan.
- In a statement on Thursday, Chandra said he had not personally borrowed money from the lenders involved and had acted only as a personal guarantor for loans taken by borrowing entities linked to the wider Essel Group.
- He also clarified that the widely reported figure of Rs 22,006 crore represented the total claims filed in the insolvency proceedings and should not be interpreted as the current amount payable or the final liability in the matter.
Union Bank of India is preparing to challenge the National Company Law Tribunal's (NCLT) approval of a resolution plan concerning Subhash Chandra's insolvency, following its opposition alongside other creditors like Canara Bank and LIC Housing Finance. The NCLT approved the plan despite their objections, citing majority support from private-sector creditors.1236711
In a statement, Union Bank indicated it would escalate the matter to the National Company Law Appellate Tribunal (NCLAT), asserting, “Now, Union Bank of India (UK) Limited is immediately challenging the decision of NCLT before NCLAT.” This move reflects broader concerns among lenders regarding substantial haircuts, as creditors anticipate recovering only a fraction of their claims under the approved plan.10
Meanwhile, HDFC Bank is also contemplating an appeal, having noted that merely 3.2% of its total claim of ₹680 crore was acknowledged by the tribunal. The NCLT's decision has raised alarms among creditors, who are wary of the implications of such significant write-offs.89
Chandra, for his part, clarified that he did not personally borrow from the lenders involved, stating he acted solely as a personal guarantor for loans taken by entities associated with the Essel Group. He emphasized that the reported figure of ₹22,006 crore pertains to total claims filed, not the current payable amount or final liability.
“The NCLT approved the plan despite opposition from Union Bank, Canara Bank, and LIC Housing Finance, citing majority support from private creditors. Chandra clarified he acted only as a personal guarantor, and the Rs 22,006 crore figure represents total claims filed, not his final liability.”
