Zee Media Group founder Subhash Chandra took loans of Rs 22,000 crore from Banks and other creditors and gave his personal guarantee in the loans. When companies defaulted the loans, Banks asked him repay the loan. He denied and case was filed in NCLT. NCLT did not provide any resolution but asked banks to decided. Over 88% creditors decided to recover only Rs 6.5 crore.
A big controversy has surrounded Zee Media Group founder and erstwhile media baron Subhash Chandra as he has secured an order to settle his personal guarantee worth ₹22,006.57 crore due to creditors by offering to pay only ₹6.5 crore. Creditors, which include top banks, have been forced into bearing more than 99% haircut.
What is the case about?
The case is related to personal guarantees that Chandra had given for borrowings of companies connected with the Essel Group. When those companies defaulted, creditors asked Chandra to repay the loan. When Chandra did not repay the loan, Indiabulls Housing Finance Limited filed case in NCLT.
What happened in NCLT?
The National Company Law Tribunal (NCLT) New Delhi Bench third judge Nilesh Sharma passed the order and went by the decision of 80.814% creditors who had approved Mr. Chandra’s offer. He was appointed as the Third Member as difference of opinion arose between Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri.
While delivering the order, the court did not come up with its own commercial plan, but left the commercial decision to the Committee of Creditors (CoC). Majority of the creditors seemed to have chosen this offer of settlement. Over 88% creditors willingly approved Mr. Chandra’s proposal.
The creditors which supported the offer included Appearance Corpcall Capital Advisors LLP, Catalyst Trusteeship, World Crest Advisors LLP, Direct Media Distribution Ventures Private Limited, Lemonade Capital Advisors LLP and Veena Investments Private Limited. There are allegations that these creditors are associated with Mr. Chandra.
The creditors which opposed the repayment plan included Axis Bank, RBL Bank, IndusInd Bank, IDBI Trusteeship (for Franklin Templeton), LIC Housing Finance, but they have only collective vote share of 19.186%. India’s largest private sector bank – HDFC Bank also opposed the offer. Public Sector Bank – Canara Bank and Union Bank of India also opposed the offer.
Subash Chandra said that he did not have funds to repay the loan amount but a net worth certificate furnished to RBL Bank Ltd. in the year 2017 reflected the net worth of Mr. Chandra at $7.17 billion, (₹45,888 crore). A separate net worth certificate provided to Canara Bank in the year 2018 assessed his net worth at ₹40,562 crore. Suddenly how he became so poor?
HDFC Bank has announced that it will challenge the ruling of NCLT.
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