HDFC Bank Likely To Challenge NCLT Order Giving 99.97 Pc Debt Haircut To Subhash Chandra

(MENAFN- IANS) New Delhi, Aug 27 (IANS) After an NCLT order approved a repayment plan that grants Essel Group founder Subhash Chandra a 99.97 per cent haircut on admitted creditor dues worth Rs 22,006 crore, HDFC Bank said on Thursday it is exploring an appeal before the National Company Law Appellate Tribunal (NCLAT).

A bank spokesperson said its admitted claim in the matter accounted for only 3.2 per cent of the total stated amount and that the loan facility was inherited from HDFC Limited following the merger of the two entities.

“With regard to the referred NCLT matter, HDFC Bank's admitted claim was only 3.2 per cent of the total stated amount. The Bank inherited this facility, which was previously provided by HDFC Limited,” an HDFC Bank spokesperson told NDTV Profit.

“The Bank is exploring filing an appeal at the NCLAT,” the spokesperson added. HDFC Bank said the facility had already been provided for and was inherited as part of the merger with HDFC Limited.

Earlier, the insolvency tribunal NCLT approved a repayment plan under which Chandra will pay just Rs 6.5 crore to settle admitted creditor claims of about Rs 22,006.57 crore in his personal insolvency resolution process.

This translates into a haircut of nearly 99.97 per cent for lenders.

"In the case of LICHFL, whose admitted claim stood at Rs 1,322.39 crore, the proposed repayment was merely Rs 38,09,294, amounting to approximately 0.028 per cent of its admitted dues. It was contended that such a negligible repayment could not receive the approval of this tribunal," said the NCLT order recording its submission.

Ruling as a third member, NCLT Member (Judicial) Nilesh Sharma had approved the plan under Section 114 of the Insolvency and Bankruptcy Code (IBC).

He rejected objections by lenders that the recovery was too meagre to merit approval.

Earlier, the two members of the National Company Law Tribunal had given a split verdict, after which the President of the forum appointed Sharma as the third member amid the difference of opinion. Sharma rejected the claims of the dissenting creditors led by LIC Housing Finance, which had argued that the payout was "unviable and unlawful”.

It had contended that against admitted claims of approximately Rs 22,006.57 crore, the repayment plan proposed the payment of only Rs 6.25 crore to creditors and Rs 25 lakhs towards process costs.

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