MUMBAI: This week the National Company Law Tribunal approved a payment plan offering just Rs. 6.5 crore in a case related to Zee Group’s Subhash Chandra’s personal guarantees for loans taken by his companies, HDFC Bank said it is exploring an appeal.The creditors submitted claims worth Rs. 22,006 crore against Subhash Chandra for the loans he backed, but the repayment plan approved by the majority of creditors and approved by NCLT approves a haircut of 99.97%, without affecting the lender’s right to recover from actual borrowers.The creditors who agreed (80.8%) contested the allegations of being related parties and argued that Rs. The Rs 6.5 crore scheme offered a better outcome compared to taking the personal guarantor into bankruptcy as Chandra’s net worth, according to the resolution professional, was only Rs. 31.8 crores, of which Rs. 25 million rupees were his mortgaged house. Chandra has disputed the Rs. Liability of Rs 22,000 crore, indicating that it reflects historical claims filed in 2022.
‘He was only a guarantor, he did not borrow’
Chandra estimated the claims of the objecting creditors at Rs 3,992 crore, of which Rs 620 crore was settled, with another Rs 1,063 to Rs 1,113 crore offered by the borrowing entities. The senior borrowers were also addressing the remaining Rs 16,201 crore acceptance claims. He said he was only a personal guarantor and had not borrowed himself, adding that most of the guarantees were provided by him after group companies defaulted as lenders and made “emotional requests” for guarantees, saying his employees would otherwise lose their jobs.The creditors who accepted said that even after the agreement, the main borrowers (group companies) were still in trouble.HDFC’s Rs 698 crore claim accounted for 3.2% of the sum. Other dissidents, accounting for around 15%, include Axis Bank, Canara Bank, RBL Bank, Union Bank UK, IDBI Trusteeship and LIC Housing Finance.LIC Housing Finance said the order does not affect the corporate obligations of the borrowers or their security.The claims arise from Chandra’s personal guarantees for loans from Vivek Infracon, Spirit Textiles and Churu Enterprises, as well as mortgage-backed facilities for Essel Corporate Resources and Jayneer Infrapower.The dissenting lenders argued that the creditors accepted by Veena Investments, Direct Media Distribution Ventures, World Crest Advisors, Lemonade Capital Advisors and Corpcall Capital Advisors were related or associated entities and controlled between 61.8% and 62% of the voting rights, making them ineligible under Section 109(4)(b) of the IBC. They cited control of Veena by Sushila Devi Goel, wife of Jawahar Goel, brother of the personal guarantor, and links between partners of Lemonade and Corpcall and companies disclosed as related parties in Veena’s accounts.The headlines of the 99.97% haircut caught the attention of the entire country, with Congress general secretary Jairam Ramesh declaring: “The National Company Law Tribunal has just approved a repayment plan by a prominent businessman under which creditors will receive only Rs 6.5 million against admitted claims of around Rs 22,006.57 million. This is not just a haircut. In reality, it is something mundane and makes a complete mockery of the Code. Insolvency and Bankruptcy 2016.In a post on
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