HDFC Bank to Challenge Court Ruling on Subhash Chandra’s Settlement

HDFC Bank has announced its intention to appeal against the National Company Law Tribunal (NCLT)'s ruling that permitted Subhash Chandra, founder of Zee Group, to settle debts amounting to over ₹22,000 crore for just ₹6.5 crore. This decision represents a recovery rate of approximately 0.03% for creditors.

The NCLT's ruling, which avoids bankruptcy proceedings, has sparked controversy among creditors, who question the depth of scrutiny applied to the debtor’s financial situation and assets. A report from The Economic Times noted that HDFC Bank, which holds an admitted claim of ₹680 crore, a mere 3.2% of the total claim, opposed the settlement.

In a formal statement, HDFC Bank outlined its position: "With regard to the referred NCLT matter, HDFC Bank’s admitted claim was only 3.2% of the total stated amount. The bank inherited this facility, which was previously provided by HDFC Limited."

The tribunal's approval of the repayment plan involved a substantial haircut of 99.97% for lenders, dismissing objections and asserting that creditor votes were vital to the commercial decision. The court noted that creditors could not simply withdraw and demand alternative settlements once a plan gained approval, as the majority of creditors had supported the resolution.

The NCLT highlighted that the future recovery potential and the overall value of the debtor’s estate were critical considerations. While some creditors argue for a forensic investigation into Chandra’s financial dealings, the tribunal has thus far deemed such an investigation unnecessary.

The insolvency proceedings began in 2024, initiated by Indiabulls Housing Finance, with claims exceeding ₹22,000 crore against various lenders. Chandra had provided a personal guarantee for loans related to Essel Group entities, leading to the NCLT's involvement.

The decision by the NCLT is expected to have significant implications for creditor-debtor relationships in India, especially in the context of the Insolvency and Bankruptcy Code.

The timing and outcome of HDFC Bank's appeal remain to be seen as the bank looks to enforce its claim amid mounting challenges in the insolvency landscape.