Now Reading: NCLT cuts Subhash Chandra’s insolvency liability to Rs 6.25 crore
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NCLT cuts Subhash Chandra’s insolvency liability to Rs 6.25 crore
The National Company Law Tribunal (NCLT) has approved a repayment plan that cuts Essel Group founder Subhash Chandra's liability from over Rs 22,000 crore to Rs 6.25 crore in a personal insolvency…
The National Company Law Tribunal (NCLT) has approved a repayment plan that cuts Essel Group founder Subhash Chandra's liability from over Rs 22,000 crore to Rs 6.25 crore in a personal insolvency case. Creditors will recover just 0.028% of their original claims, a haircut of nearly 99.97%. The plan was approved by a majority of the tribunal bench after a third member resolved earlier differences between two members.
Indiabulls Housing Finance, now Sammaan Capital, had filed insolvency proceedings in 2022 against Chandra as personal guarantor for a Rs 170 crore loan to Vivek Infracon. Chandra's repayment plan allocates Rs 6.25 crore to creditors against admitted claims of approximately Rs 22,006.57 crore, with another Rs 25 lakh for process costs. Several banks and LIC Housing Finance opposed the plan, questioning the negligible recovery.
The third member, NCLT Judicial Member Nilesh Sharma, directed the exclusion of claims by two creditors that lacked supporting documents. The matter will now go before the original bench for a formal order implementing the majority decision.
Indian Opinion Analysis
The NCLT's ruling illustrates how personal guarantees under the IBC can be sharply contested when a guarantor's asset position has collapsed since the loan was given. Chandra's 2017 net worth of Rs 45,888 crore, as claimed by creditors, contrasts with his current declared net worth of Rs 31.79 crore. The tribunal's acceptance of the plan despite 99.97% haircut hinges on its view that the IBC does not guarantee full recovery, only a fair process. Unsupported claims by two creditors, one representing 960 individuals, were dismissed as a procedural lapse by the resolution professional. The next step is the original bench issuing a formal order, after which creditors with excluded claims may appeal to the appellate tribunal NCLAT.
Source: barandbench.com
This brief was synthesised by AI from the source linked above.
