The mechanic said that he will replace timing chain but not the balance shaft chain. If something happens to balance shaft chain is it a catastrophic as timing chain ?

It doesn't do as much, and probably wasn't affected by being hydrolocked (if this is the same engine as wouldn't start in the cold weather etc.). All that the balance shaft chain does is spin balance shafts and the water pump.

This is another one that I'd replace while I'm that far in anyways, unless I was planning on selling it soon.