Union Bank of India will challenge the National Company Law Tribunal's (NCLT) approval of a repayment plan in the personal insolvency proceedings against Essel Group Chairman Subhash Chandra before the National Company Law Appellate Tribunal (NCLAT).

The bank in a statement on X said that it, along with other public-sector creditors had opposed the resolution plan and urged the NCLT not to approve it.

“In the matter of personal insolvency case filed by Indiabulls Housing Finance Ltd against Dr Subhash Chandra, Union Bank of India (UK) Ltd along with other public sector undertakings like Canara Bank, LIC Housing Finance Ltd etc have rejected the resolution plan and pleaded before NCLT for not approving the same,” the bank said.

However, the plan was approved by the tribunal after receiving the required majority vote from certain private creditors, the bank said.

"Union Bank of India (UK) Ltd is immediately challenging the decision of NCLT before NCLAT," the bank said.

The NCLT had approved a repayment plan under which Chandra would pay ₹6.5 crore against admitted creditor claims of about ₹22,006.57 crore. This translates into a recovery of roughly 0.03%, or around three paise for every ₹100 claimed, and a haircut of nearly 99.97% for creditors.

HDFC Bank said on Thursday that it had opposed and voted against the resolution, which was approved by the majority of creditors. The bank said its admitted claim represented only 3.2% of the total stated claims of ₹22,006 crore, amounting to around ₹705 crore, and that the borrower was also liable for interest payments, The Hindu reported.

The bank said it had inherited the loan facility from HDFC Ltd before the merger and was considering approaching the NCLAT.

LIC Housing Finance has admitted claims of ₹1,322.39 crore in the matter.

The lender clarified that the NCLT order relates to the insolvency resolution process against Chandra as a personal guarantor under the Insolvency and Bankruptcy Code, 2016.

It said the order does not adjudicate, discharge, dilute or otherwise affect the corporate liabilities of the principal borrower entities.