LIC Housing Finance Ltd (LICHFL) is set to recover only a fraction of its original claim against Essel Group founder Subhash Chandra, following the approval of a repayment plan by the National Company Law Tribunal (NCLT). The lender's admitted claim of Rs 1,322.39 crore in the insolvency proceedings has been drastically reduced, with LICHFL now expected to receive just Rs 38.09 lakh.
NCLT Approves Chandra's Repayment Plan
The NCLT has given its nod to Subhash Chandra's proposal to settle claims stemming from personal guarantees he provided for loans to companies within the Essel Group. Chandra proposed a payment of Rs 6.25 crore against guarantees linked to loans reportedly totaling around Rs 22,000 crore, though Chandra's team disputes the overall liability figure for personal guarantees, citing it closer to Rs 3,992 crore.
The insolvency proceedings against Chandra were initiated in 2024 by Indiabulls Housing Finance. The NCLT's approval of this resolution plan prevents the case from escalating into full bankruptcy proceedings for the personal guarantor.
LICHFL Retains Rights Over Secured Assets
Despite the significant reduction in the payable amount under the personal insolvency plan, LICHFL has clarified that the NCLT order does not diminish its rights over the secured assets tied to the original financial facilities. "LICHFL continues to hold and retain all its rights, security interests, enforcement remedies and recovery avenues over the said secured assets," the company stated.
The lender also emphasized that these insolvency proceedings pertain to Chandra in his capacity as a personal guarantor under the Insolvency and Bankruptcy Code, 2016. This distinction means the resolution does not alter or extinguish the corporate liabilities of the principal borrowers, ensuring LICHFL's ability to pursue recovery against the underlying assets.
HDFC Bank Explores Appeal
HDFC Bank, another creditor involved in the proceedings, had an admitted claim representing 3.2% of the total stated claims. The bank, which inherited the facility from the erstwhile HDFC Ltd, opposed the proposed settlement. However, the resolution plan secured approval from the required majority of creditors. HDFC Bank has indicated it is exploring options to appeal the NCLT's decision.
This case underscores the substantial disparity often seen between creditor claims and the amounts recovered through personal insolvency resolution processes in India.