Canara Bank, Union Bank, and LIC Housing Finance to Challenge NCLT Approval of Subhash Chandra's Repayment Plan

Canara Bank, Union Bank of India (UK) Ltd, and LIC Housing Finance Ltd announced on Saturday that they will challenge the National Company Law Tribunal's (NCLT) order approving a repayment plan proposed by Essel Group founder Subhash Chandra. The decision escalates the ongoing legal battle concerning the settlement of claims arising from personal guarantees.

Canara Bank, which held a 1.60 per cent voting share, stated that it had voted against the repayment plan and intends to file an appeal before the National Company Law Appellate Tribunal (NCLAT). In a post on the social media platform X, the bank noted that it had previously sought a forensic audit, but the request was not allowed due to its minority voting share. Union Bank of India (UK) similarly stated that it had rejected the plan and would immediately challenge the NCLT order before the NCLAT.

Additionally, LIC Housing Finance announced it would file an appeal alongside other public financial institutions. According to the lenders, the repayment plan received approval because other financial creditors holding 80.81 per cent of the voting share backed the proposal.

The NCLT had approved Chandra's repayment plan on August 25. Under the approved terms, ₹6.25 crore is to be paid to creditors, along with ₹25 lakh allocated towards insolvency-process costs. This settlement stands against total admitted claims of around ₹22,006.57 crore.

The legal proceedings stem from personal guarantees provided by Subhash Chandra for borrowings raised by companies linked to the Essel Group. Despite objections raised by several lenders, the tribunal cleared the plan after determining that it was supported by the required majority.

In response to the developments, Subhash Chandra issued a public statement on Thursday rejecting the portrayal of the ₹22,000-crore figure as money personally borrowed by him. He clarified that the amount represents claims arising from guarantees he had provided for corporate borrowings. Chandra further argued that the claims of the lenders opposing the repayment plan amount to approximately ₹3,992 crore rather than ₹22,000 crore, reiterating that the group remains committed to settling its outstanding obligations.

"This case highlights the complexities surrounding personal guarantees and corporate debt resolution under the insolvency framework. When majority and minority creditors diverge significantly on settlement terms, litigation naturally extends to appellate tribunals like the NCLAT. For the broader financial and entrepreneurial ecosystem, it underscores the critical importance of evaluating risk, voting thresholds, and corporate governance structures when managing large-scale debt obligations and personal liabilities." — Dr. Shishir Gupta, Founder & CEO, StartupLanes