Several lenders, including public sector financial institutions, are set to challenge before an appellate tribunal the National Company Law Tribunal's (NCLT's) approval of a repayment plan submitted by Essel Group founder Subhash Chandra that proposes to pay just ₹ 6.25 crore against admitted claims of about ₹ 22,006.57 crore.
Canara Bank, Union Bank of India (UK) and LIC Housing Finance (LICHFL) have said they will appeal against the order, before the National Company Law Appellate Tribunal (NCLAT), which implies an extremely low recovery for creditors.
Significantly, the department of financial services (DFS) under the Union finance ministry has reposted all three lenders' statements on X, signalling government support for the challenge at a time when the development has triggered political opposition.
The repayment plan secured 80.81 per cent of the creditors' votes, despite opposition from the three public-sector entities.
Canara Bank, which had a 1.60 per cent voting share, said it had voted against the plan, along with Union Bank (0.76 per cent) and LICHFL (6.09 per cent). It said it had also sought a forensic audit, but the request could not be approved because of its minority voting share.
Union Bank said it had sought rejection of the plan before the NCLT but was outvoted by private creditors. It will now challenge the decision before the NCLAT.
LICHFL said it too had voted against the plan and would file an appeal along with other public financial institutions.
The proceedings relate to Chandra's insolvency as a personal guarantor for loans taken by Essel Group-linked companies. Indiabulls Housing Finance had initiated the insolvency proceedings after defaults.
Private lender IndusInd Bank, which held 1.11 per cent voting share, did not vote in the repayment approval plan.