The National Company Law Tribunal (NCLT) has approved a repayment plan under which creditors of Essel Group founder Subhash Chandra will receive ₹6.25 crore against admitted claims of around ₹22,006.57 crore.
The ruling translates into a recovery of roughly 0.028% of the admitted claims, implying a haircut of about 99.97%. The final amount could change after certain unsupported claims are removed from the creditors’ list.
Insolvency case dates back to 2022
The proceedings against Chandra began after he acted as a personal guarantor for a ₹170 crore loan extended to Vivek Infracon. After the loan turned bad, Indiabulls Housing Finance, now known as Sammaan Capital, approached the NCLT in 2022 under Section 95 of the Insolvency and Bankruptcy Code (IBC).
The plea was admitted in 2024.
Two NCLT members had earlier differed over the repayment plan. Judicial Member Ashok Kumar Bhardwaj supported its approval, while Technical Member Reena Sinha Puri raised legal and procedural concerns.
Third member backs repayment plan
On August 25, NCLT Member Nilesh Sharma favoured approval of the plan. It provides ₹6.25 crore for eligible creditors and sets aside another ₹25 lakh towards insolvency resolution process costs.
“The Repayment Plan submitted by the Personal Guarantor, in my opinion, is required to be approved under Section 114 of the Insolvency and Bankruptcy Code, 2016," Sharma said.
Sharma also directed the Resolution Professional to remove claims filed by Anil Kumar on behalf of 960 individuals and Sunil Jain on behalf of 300 individuals, citing a lack of supporting documents. The ₹6.25 crore will subsequently be redistributed among eligible creditors.
Creditors had opposed the proposal
Several financial institutions challenged the repayment plan, questioning the low recovery and the verification of claims. LIC Housing Finance, for instance, said it would receive only ₹38.09 lakh against an admitted claim of ₹1,322.39 crore.
Creditors also raised questions over entities they alleged were associated with Chandra and pointed to earlier net-worth certificates showing substantially higher figures.
However, Sharma held that the statutory definition of an “associate” could not be expanded solely on the basis of alleged family or business links. He also ruled that the repayment plan would bind all creditors, including those who voted against it or abstained.
The matter will now return to the original bench for a formal order implementing the majority view.