Union Bank Challenges NCLT Approval Of Subhash Chandra Plan

Union Bank of India has announced plans to challenge the National Company Law Tribunal's (NCLT) approval of the resolution plan for Essel Group Chairman Dr Subhash Chandra. The bank will approach the National Company Law Appellate Tribunal (NCLAT) to appeal the decision.

The personal insolvency proceedings against Chandra were initiated by Indiabulls Housing Finance Ltd. Union Bank of India, along with Canara Bank and LIC Housing Finance, had rejected the proposed resolution plan and urged the NCLT not to approve it. However, the tribunal cleared the plan after it secured the required majority support from certain private-sector creditors.

HDFC Bank has also indicated that it could challenge the NCLT order. The lender said only 3.2 per cent of its total claim had been admitted under the tribunal's order, with an overall claim of ₹680 crore. HDFC Bank had opposed and voted against the resolution plan, which was approved by the majority.

The case has attracted attention due to the steep reduction creditors face under the approved repayment plan. The NCLT-approved plan provides for around ₹6.5 crore to settle admitted creditor claims of approximately ₹22,006.57 crore. This translates into a recovery of only around 0.03 per cent for creditors and a haircut of nearly 99.97 per cent.

The resolution plan has been controversial, with lenders facing a significant reduction in their claims. The plan was approved by the NCLT despite opposition from several lenders, including Union Bank of India and HDFC Bank.

The appeal by Union Bank of India could bring the resolution plan under further judicial scrutiny. The bank's decision to challenge the NCLT approval is likely to be closely watched by other lenders and stakeholders.

The case highlights the challenges faced by lenders in recovering their dues from distressed borrowers. The steep haircut faced by creditors in this case has raised concerns about the effectiveness of the insolvency resolution process.

The outcome of the appeal will be crucial in determining the fate of the resolution plan and the recovery of dues by lenders. The case is likely to have significant implications for the banking sector and the insolvency resolution process in India.

In conclusion, the decision by Union Bank of India to challenge the NCLT approval of the resolution plan for Subhash Chandra is a significant development in the case. The appeal is likely to bring the resolution plan under further judicial scrutiny, and the outcome will have important implications for lenders and the insolvency resolution process in India.