HDFC Bank may appeal ₹6.5-cr repayment plan for Subhash Chandra

The country's largest private lender said under the order, it expects to recover only 3.2% of its total claim.

HDFC Bank plans to challenge the National Company Law Tribunal (NCLT) order approving Zee group founder and chairman emeritus Subhash Chandra’s ₹6.5 crore repayment plan to resolve his personal insolvency proceedings.

Subhash Chandra, in a statement on Thursday, said he had never personally borrowed money from the lenders. (Mint File)

India’s largest private lender told Mint on Thursday that, under the order, it expects to recover only 3.2% of its total claim. HDFC Bank had opposed the plan and voted against it. The bank is now considering an appeal before the National Company Law Appellate Tribunal (NCLAT).

The approval came from third judicial member Nilesh Sharma on Tuesday, who acted as the tiebreaker after the original two-member NCLT bench gave different views on the plan. Sharma approved the plan and sent the matter back to the regular bench for further directions on its implementation.

Government sources told Mint that the Subhash Chandra case should not be seen as Chandra personally taking loans worth thousands of crores. The insolvency case is against him because he had given personal guarantees for loans taken by several Essel and Zee-linked companies.

The sources said only about ₹2,574 crore of the claims relate to loans for which Chandra had given a personal guarantee at the time they were originally taken. Most of his other guarantees were given later as additional security.

The companies that actually borrowed the money remain responsible for their loans. The repayment plan provides for about ₹1,494 crore to be paid by these companies, apart from ₹6.25 crore from Chandra’s personal assets. Creditors can also continue to recover money from the companies and their securities, the government sources said. They added that the ₹6.5 crore offered by Chandra reflects what can currently be recovered from his personal assets.

Notably, under the repayment plan, ₹6.25 crore will be paid to creditors, while another ₹25 lakh will be used to cover insolvency process costs. Together, the two amounts total ₹6.5 crore, which is the overall amount proposed under Chandra’s repayment plan.

Chandra, in a statement on Thursday, said he had never personally borrowed money from the lenders. “There is no personal borrowing by Dr. Subhash Chandra from any of the creditors named in the order or from any other creditor/lender. He only signed personal guarantees,” it said.

Chandra said the companies for which he had given guarantees had borrowed nearly ₹45,000 crore as of January 2019, of which about ₹43,000 crore had since been repaid. He said his net worth was ₹31.79 crore in 2024, including a house worth about ₹25 crore, and the plan was based on what he could pay from his own assets. The plan received 80.81% support from creditors by value. HDFC Bank, LIC Housing Finance, Axis Bank, Canara Bank, RBL Bank and Union Bank were among those that opposed it.

The third member’s order considered the plan under Section 114 of the Insolvency and Bankruptcy Code. It found some procedural problems but said they were not serious enough to reject the plan.

Sharma said creditors had participated in the process and no sufficient prejudice had been established. He also held that the tribunal should not substitute its own commercial assessment for the decision taken by the required majority of creditors.

To be sure, Sharma’s opinion is not yet the final order. The matter will return to the regular bench for final directions. Once the plan is finally approved and implemented under Section 114, it will bind creditors under Section 115. Once Chandra completes the repayment plan, he will exit the insolvency process.

The case began over a ₹170-crore loan to Vivek Infracon, for which Chandra was a personal guarantor after the loan turned bad. Indiabulls Housing Finance—now called Sammaan Capital—approached the NCLT in 2022 seeking insolvency proceedings against Chandra.