This effectively means lenders are taking a staggering 99.97% haircut—recovering only 0.03% of what they are owed . Naturally, this has raised a huge question: Is this justice for banks? And will the appellate tribunal overturn this controversial order?
Let’s break down this complex case in simple words so every layman can understand what’s really going on.
The Core of the Controversy: The Numbers
Here’s the shocking headline: Subhash Chandra, the founder of the Zee Group, filed for personal insolvency. Creditors filed claims totalling ₹22,006.57 crore against him. The NCLT approved a plan where Chandra will pay a mere ₹6.25 crore to creditors and another ₹25 lakh towards process costs, totalling ₹6.5 crore .
To put it in perspective, if you owed ₹100,000 to a bank, this deal would be like paying just ₹30 and walking away free.
Here’s the shocking headline: Subhash Chandra, the founder of the Zee Group, filed for personal insolvency. Creditors filed claims totalling ₹22,006.57 crore against him. The NCLT approved a plan where Chandra will pay a mere ₹6.25 crore to creditors and another ₹25 lakh towards process costs, totalling ₹6.5 crore .
To put it in perspective, if you owed ₹100,000 to a bank, this deal would be like paying just ₹30 and walking away free.
HDFC Bank’s Stance: Why Are They Angry?
HDFC Bank has been one of the loudest voices against this settlement. Here's why :
💥They Voted Against It: HDFC Bank clearly stated that it opposed this settlement and voted against the resolution. However, the plan was approved by a majority of creditors (80.8%) .
💥It’s a "Loss" for Them: The bank's admitted claim was about ₹680 crore, which constitutes only 3.2% of the total claims . Under this plan, they will recover next to nothing.
💥The Inheritance Factor: The bank clarified that the loan facility was inherited from the erstwhile HDFC Ltd after the merger. They didn't originate this specific debt but are stuck with the fallout .
💥They Voted Against It: HDFC Bank clearly stated that it opposed this settlement and voted against the resolution. However, the plan was approved by a majority of creditors (80.8%) .
💥It’s a "Loss" for Them: The bank's admitted claim was about ₹680 crore, which constitutes only 3.2% of the total claims . Under this plan, they will recover next to nothing.
💥The Inheritance Factor: The bank clarified that the loan facility was inherited from the erstwhile HDFC Ltd after the merger. They didn't originate this specific debt but are stuck with the fallout .
Two Sides of the Same Coin: The Defense
While HDFC Bank and other dissenting lenders like LIC Housing Finance and Axis Bank are furious, there are two major defenses for this deal .
1. Chandra’s Defense: “I Didn’t Borrow the Money”
Subhash Chandra has aggressively pushed back against the narrative that he took a personal loan of ₹22,000 crore . He says:
💥He never borrowed money personally; he only acted as a corporate personal guarantor for loans taken by Essel and Zee-linked companies .
💥He has sold personal assets to pay off creditors, and the group has already repaid ₹43,000 crore of its total ₹45,000 crore debt .
💥He disputes the ₹22,000 crore figure, claiming the actual liability is only ₹3,992 crore, of which ₹620 crore is already settled .
💥He never borrowed money personally; he only acted as a corporate personal guarantor for loans taken by Essel and Zee-linked companies .
💥He has sold personal assets to pay off creditors, and the group has already repaid ₹43,000 crore of its total ₹45,000 crore debt .
💥He disputes the ₹22,000 crore figure, claiming the actual liability is only ₹3,992 crore, of which ₹620 crore is already settled .
2. Government & NCLT Defense: "The Companies Are Still on the Hook"
Government sources have tried to calm the storm, stating that the ₹22,000 crore figure is misleading because it does not represent the total write-off of loans . They argue:
💥The plan covers Chandra’s personal assets as a guarantor, not the corporate debt of the companies .
💥The principal borrowing companies remain liable for their debts. Creditors can still recover money from those companies and their securities .
💥The NCLT agreed that pushing Chandra into bankruptcy wouldn't help banks recover more, as his personal net worth is only about ₹31.8 crore (including a house worth ₹25 crore) .
💥The plan covers Chandra’s personal assets as a guarantor, not the corporate debt of the companies .
💥The principal borrowing companies remain liable for their debts. Creditors can still recover money from those companies and their securities .
💥The NCLT agreed that pushing Chandra into bankruptcy wouldn't help banks recover more, as his personal net worth is only about ₹31.8 crore (including a house worth ₹25 crore) .
What Happens Next? Will NCLAT Overturn the Order?
The decision now rests with the NCLAT.
Will they overturn it? The NCLT had a split verdict initially, and a third member was appointed to break the tie. The majority of creditors voted for the plan. The NCLT often does not interfere with the "commercial wisdom" of creditors unless there is a legal violation .
The Challenge: Dissenting lenders like HDFC Bank are likely to argue that the plan is "unviable and unlawful" and that voting was manipulated by related parties .
This is a test for the Insolvency and Bankruptcy Code (IBC). If the NCLAT upholds the order, it sets a precedent where personal guarantors can escape massive liabilities by paying a tiny fraction, provided they can prove they have no personal assets. If they overturn it, they will send a strong message that banks’ money is not so easily written off.
Will they overturn it? The NCLT had a split verdict initially, and a third member was appointed to break the tie. The majority of creditors voted for the plan. The NCLT often does not interfere with the "commercial wisdom" of creditors unless there is a legal violation .
The Challenge: Dissenting lenders like HDFC Bank are likely to argue that the plan is "unviable and unlawful" and that voting was manipulated by related parties .
This is a test for the Insolvency and Bankruptcy Code (IBC). If the NCLAT upholds the order, it sets a precedent where personal guarantors can escape massive liabilities by paying a tiny fraction, provided they can prove they have no personal assets. If they overturn it, they will send a strong message that banks’ money is not so easily written off.
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